The French Election: Round Two of Europe’s Internal Leadership Battle
By Richard Matthews, London
Live Squawk News, 17 April 2017
After the relative calm election result from The Netherlands, the French presidential election — beset by political scandals and discontent over the state of its economy and the EU’s perceived role in it — will be the next major test of the European populist movement followed by German elections on 24th September. This presupposes that there won’t be Italian elections, which many would say is foolish considering Italy has had over 60 Governments since 1945. Regardless, the French elections are a key test of the European Project, given France was one of it founding members. Its outcome could make for interesting trading for both Euro and Sterling, and could affect European bourses, not to mention Brexit negotiations.
Marine Le Pen appears good to get to the second round, but looks like the outsider to win. However, after the surprises of Trump and Brexit, it would be foolhardy to discount such an outcome yet one senses the markets have done just that. Despite toning down her views, she is still committed to holding a referendum on France’s membership to the single currency. This uncertainty would weaken the Euro and stock indices, including London’s, while lifting sterling.
On Sunday 23rd April, French citizens from Paris to Basse-Terre in Guadeloupe will go to the polls for round one. Unless one of the candidates has polls in excess of 50%, exceedingly unlikely, the two candidates who have the largest number of votes will head for the final showdown two weeks later on 7th May.
The final showdown may be between two candidates whose parties are not only polar opposites, but have never held power: Le Pen of the far-right, anti-EU National Front, and Emmanuel Macron and his pro-EU movement party, En Marche! If this is the case , with Macron the likely winner , the Euro will strengthen against Sterling as the French commitment to the European project would remain unswerving. However with the polls so close it would be a brave person to rule out a Mélenchon , Le Pen run off in the second round . If this were to happen the Euro would come under intense pressure as both candidates are committed to referendums on France’s membership of the Euro and the terms of its European membership. The markets look jittery with large outflows of Euros to neighbouring countries in recent days so is the smart money seeing this as a real outcome ? It appears so.
French voters elect presidents every five years, and this year the incumbent Francois Hollande, the most unpopular President in living memory, is the first President who will not be standing for re-election. Under French law he could stand for another term, but he has appeared, and in reality has been, a sad shadow of the man who narrowly defeated Nicolas Sarkozy in in 2012. Each candidate for the presidency must have obtained at least 500 sponsoring signatures of elected officials from at least 30 departments or overseas territories.
In both rounds, polling booths are open around the country from 8:00 AM to 6:00 PM. Most French overseas departments and territories get to vote a day early, along with expatriates living in the Americas. This ruling was introduced several years back after it appeared that voters in time zones behind Europe showed a reluctance to cast votes once they knew the probable results.
Unlike many other democracies, France doesn’t allow any publication of results or estimates of polling from the day prior until the booths are closed in the cities. First-round campaigning must end by midnight the Friday before the election. Given most polls have been so inaccurate, this might be a blessing.
Once the new President is sworn in, 10 days after the second vote on 17th May, he, or she, will announce their team. A month later are two rounds of legislative or parliamentary elections to choose deputies for the National Assembly. The new President will then see how easy he or she will be able to govern and enact their promises.
France’s election is one of the most difficult to call for many years. Its campaign has seen support for its two traditional ruling parties, the Republicans and Socialists, drop. Yet, France is a conservative country, with many fundamental economic and social problems. This year may be the year the people seeks radical solutions, even if Le Pen doesn’t win. Far-left candidate Jean-Luc Melenchon, also anti-EU, has seen a rise in polls that suggest support for the status quo is further weakening in the final days of the campaign.
Richard Matthews, who began in career in 1973, is a former trader-broker in the London money, futures and foreign exchange markets. Twitter @dickiematthews5
This column is the opinion of the author and does not necessarily reflect the opinion of Live Squawk.