And just like that… Another election to add to your list for 2024! In an unexpected move, French President Emmanuel Macron has called for a snap parliamentary election in France, following a significant defeat for his party in European Parliament elections.
While the French will be cheering on Les Bleus in the Euros and just before the Paris Olympics gets underway, French voters will be asked to go to the polls to elect 577 deputies to the National Assembly. The question many of us are asking is, why would Macron call a snap election when he wasn’t required to do so for another three years?
Macron’s Renaissance party only garnered 14.5% of the vote in the European election, significantly trailing Marine Le Pen’s right-wing RN party, which won 31.5%. Despite the predictability of the outcome, Macron decided that toughing it out until 2027 posed too many risks. Critics would have increasingly questioned Macron’s legitimacy and called for his resignation. After seven years in office, Macron doesn’t really have any avenues left to try and bolster his party’s popularity and continuing as is, it would seem inevitable of a Le Pen presidency in 2027.
Instead, Macron has taken a gamble by dissolving the National Assembly and has called for new elections. The move aims to draw out the opposition and weaken their momentum. The anticipated result is that the RN will emerge as the largest party in the assembly with polls suggesting RN will secure between 243 and 305 seats in the 577-seat chamber. The number that we must focus on is 289 – if RN attains an absolute majority of 289 seats or more, Macron would have to appoint an RN prime minister, resulting in a scenario whereby Macron handles foreign affairs with limited influence and RN controls domestic policy, essentially rendering Macron a lame-duck president.
This is a calculated move. By pushing the RN into a governing role, Macron hopes the party will face the challenges of administration, exposing them to public dissatisfaction currently aimed at his own party. This strategy aims to weaken Le Pen and the RN by the time of the 2027 presidential election, reducing the likelihood of a Le Pen presidency.
If the RN becomes the largest party without an absolute majority, other opposition parties might form a coalition with Renaissance to keep the RN out of power. This coalition could allow Macron to consolidate the centre by integrating elements of the centre-right and socialist left. The fractured state of the left-wing parties following the European election could make such a coalition feasible.
Macron's gamble is a significant political manoeuvre aimed at reshaping French politics to prevent a Le Pen presidency in 2027. The success of this strategy remains uncertain, but as inflation and interest rates will continue to influence French sovereign bond yields in the short term, further credit rating downgrades are likely. French sovereign yields have risen and futures point to further losses as worries mount about a Le Pen presidency. The CAC-40 (a French stock market index that tracks the largest 40 French stocks based on their market cap) is now in negative territory, having been up over 10% year-to-date.
For those monitoring EU policymaking, the French political landscape leading up to 2027 will be crucial. The European Council, comprising the heads of member states' governments, remains the EU’s most powerful institution. If Le Pen wins the presidency in 2027, it would mark the first time a Eurosceptic leader from the core French-German axis sits in the Council. Unlike previous Eurosceptic leaders constrained by coalition politics, Le Pen, potentially backed by an RN majority in the National Assembly, could wield France’s European veto more freely, significantly impacting EU dynamics.
To read more on the subject of elections and investing, read our article “How important is politics for investors in 2024?”
