Le Pen’s far-right nationwide rally features election

With just days to go before France’s snap parliamentary election, the chances of victory are looking high in the first round of two-phase voting.

According to Elabé’s unedited opinion polls ahead of the first vote on June 30, a nationwide rally of Marine Le Pen and her allies could see 36% of the vote, indicating growing backup for the party’s euroskeptic, anti-immigration program. Is.

Meanwhile, leftist untapped customer penetration is projected to lag behind at 27%, with President Emmanuel Macron’s Renaissance birthday celebrations expected to gain 20% by June 27.

The shift to centrist politics has spooked buyers and analysts, who warn of effects ranging from “political paralysis” to “immediate financial crisis.”

However, given the complexity of France’s vote casting system, there is little to predict the final outcome of France’s final vote on July 7.

CNBC takes a look at the chances of a far-right France victory and the impact on markets.

Under France’s two-stage vote casting system, all parliamentary candidates who obtain at least 12.5% ​​of registered citizens in the community travel to a second round of runoffs – an achievement that is achieved by a nationwide rally of constituencies. Most likely to reach a huge variety. ,

However, even with widespread facilities in the first round, the birthday celebration may be halted at the final hurdle by citizens using the “lay vote utility” – or tactical vote casting – to keep them out.

It could have been seen as part of Macron’s gambit when the French leader called for a surprise vote following the momentum’s record 31.3% victory nationwide rallying in European Parliament elections. Others say the president is hoping to discredit his competition ahead of France’s 2027 presidential election, with Macron claiming there is a possibility of “civil war” if both win.

Voter turnout for national elections can be expected to be better – and therefore more representative – than the 51% who cast their ballot in the EU vote.

With this in mind, analysts see a 30% to 40% chance of the national rally winning the 289 seats needed to reserve an absolute majority in the 577-seat National Assembly.

A more likely outcome, on the other hand, could have key features for far-reaching consequences, with the nationwide rally undoubtedly becoming the largest birthday celebration in France, but ultimately falling short of a majority and reaching a single majority. Extremely divided hung parliament.

Holger Schmieding, economist at Berenberg Storage, told CNBC on Monday that such a standoff could cost France a loss in growth, an increase in surrender spreads and a “bad reputation globally.”

Already, France’s blue-chip CAC 40 index is headed for its worst pace since May 2023, having fallen as much as 6% since the vote was announced on June 9. The gap between French and German lending rates – a key indicator of French political outlook – has also reached its widest level in more than a decade.

A majority government consisting of either a far-right or a far-left coalition, meanwhile, could yield much more dramatic results.

The “spending agenda” of both birthday celebrations – whose insurance policies each come with a reduction in the leaving period and a cut in the source of revenue tax – could lead to an “immediate fiscal crisis”, Schmieding recommended. .

Citi analysts said in a note on Thursday that markets have recently been “very optimistic” about the benign results, including its high potential for gridlock or abolishing parliament, on a 5% to 20% decline in French equity valuations. Can dominate.

“Combined with our findings that French stock markets tend to be more volatile than peers around elections, there may be reason to expect additional turmoil from here,” the analysts said.

The CEO of Paris-based Euronext, Europe’s largest reserve conversion team, sought to calm investor concerns earlier this year, telling the FT that on balance neither the left nor the right could change their surplus termination policies. Will be able to implement. Scores the president, businesses and the EU.

On Monday, Jordan Bardella – Le Pen’s 28-year-old protégé who could become prime minister under an impressive display for the national rally – was seen stepping back on some additional lockdown measures, vowing to implement “appropriate Was. Expenditure plans. It comes as France battles to bring the deficit back to the EU’s 3% of GDP limit.

On the other hand, even with additional stable fiscal plans, parliamentary gridlock may make it difficult to implement such policies. Bardella, for his part, has recently stressed that he “will need an absolute majority to govern” in order to shore up his support.

“You start with a deficit of 5.5%, with a debt of 110%, you are unable to do anything for the next three years, which means the deficit is not coming down. For me this is the biggest issue that France faces. facing at the moment,” Mohit Kumar, Jefferies’ monetary economist for Europe, advised CNBC’s “Squawk Box Europe” on Tuesday.

The same will likely apply to alternative coverage boxes as well, with an extended nationwide rally likely failing to garner backup for many of its key plans. Kumar warned that this would lead to “political paralysis”.

For example, Le Pen is unlikely to stick to her far-right, anti-immigration stance – a position that may be unpalatable to the increasingly far-left coalition of MPs. Meanwhile, the center has resisted appropriate crime and security plans.

On the other hand, the populist Le Pen may be willing to moderate her positions on alternative issues such as EU coordination and financial policy, mirroring Italy’s nationalist Prime Minister Giorgia Meloni, who is often criticized for her pragmatic approach to pro-EU friends. Credit is given to family members.

Kumar noted, “(Le Pen) has been a Euroskeptic, but I think the views have definitely declined.” “In that respect, maybe she’ll become like Melonie.”

Schmieding, while noting that Le Pen could be more generous if elected, said she might channel her inner Meloni to reserve a prize for later: the 2027 French presidency.