Investment Institute
Macroeconomics

France: political uncertainty to persist

  • 10 July 2024 (10 min read)
KEY POINTS
The left alliance NFP secured c. 180 seats in the National Assembly – still far from the majority threshold – the centrist Ensemble came second with c. 168 and the far-right RN third with just 143, well below poll projections.
None of the most radical macroeconomic platforms tabled during the campaign has a realistic chance to be implemented. But the new problem is how a three-way split can be pulled into a workable government.
Most concerns and a likely timetable for resolution focus on France’s budget and fiscal outlook. With France facing an Excessive Deficit Procedure, a new government must deliver a budget adhering to EU rules by early October.
The path forward is uncertain, France having no history of this type of coalition. We expect several trial-and-error attempts at a solution but think a short-term government with limited mainstream agenda is a likely outcome.

The surge in the Rassemblement National (RN) in the European elections continued into the first round of the national elections: the far-right party came out first in 297 constituencies. The second-round brought however a very sharp correction. Not only did the RN fail to achieve the outright majority that it had hoped – although we suggested looked unlikely after the first round – but it fell well short of other groups, coming in third with just 143 seats, below Macron’s Ensemble that recorded c.168 seats (down heavily from 245 in 2022) and the Nouveau Front Populaire (NFP) – the left-wing alliance – that came first with c.180 seats (there is still some margin around the numbers per party since deputies have until 18 July to declare their affiliation to a parliamentary group).


The “Republican tradition” is that the President of the Republic appoints someone from the biggest group in parliament as Prime Minister, although it is not a constitutional obligation. NFP is using this tradition to claim the job, with internal jockeying among the various components of the alliance, which ranges from the radical La France Insoumise (LFI), probably the biggest caucus with NFP once deputies declare their affiliation, to historical government parties (Socialists, Communists and Greens). Arithmetically, a “NFP-only” government, implementing the alliance’s radical economic platform, would have almost zero chance of survival, since all the other groups would have the numbers to force a NFP Prime Minister to resign by voting a motion of no confidence.

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UK reaction: In the right direction
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UK reaction: In the right direction

  • by Gabriella Dickens
  • 18 July 2024 (3 min read)
Investment Institute
UK reaction: Still at target, but services remains sticky.
Macroeconomics Market Alerts

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