Quick Bites | Shock Election Result in France

France looks headed for political instability after a surprise win by the left-wing coalition in last Sunday’s election left no party able to claim the majority needed to govern.

The New Popular Front — which includes the Socialists and far-left France Unbowed — is poised to gain more seats in the National Assembly than Marine Le Pen’s National Rally or President Emmanuel Macron’s centrist alliance. With no group anticipated to gain an absolute majority in the lower house, it’s unclear how the country, which doesn’t have a tradition of coalitions, will form a government that is able to pass laws.

Many were shocked when President Macron called a snap election in the wake of his disastrous showing in last month’s European Parliamentary elections. Effectively, Macron seems to have swapped the risk of the extreme right with the extreme left, and it’s difficult to know where the French administration ends up, and what policies it adopts. 

If the markets see a scenario where the far left is calling the shots, then all the hard-won pro-business reforms that Macron fought for could be rolled back. What does the far-left look like in France? Think of Jean-Luc Mélenchon, leader of the far-left La France Insoumise, who is like France’s answer to Jeremy Corbyn – anti US, anti-NATO, anti-business, and anti-pension reform. His alliance could become the largest force in the National Assembly.

That would be disastrous for the country’s finances. And investors hate surprises. Just ask Liz Truss. The shortest-tenured prime minister in UK history.

Source: Politico