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Don’t crow too loudly over Macron

Don’t crow too loudly over Macron

Markets may be over optimistic on France

by Meghnad Desai in London

Tue 2 May 2017

After the success of Emmanuel Macron in the first round of the French presidential elections, markets around the world rallied strongly. The centrist candidate who has pledged to radically reform the French economy took 24% of the vote, and is predicted to win the final round on 7 May with support from 60% of the electorate. But a Macron victory will not automatically end the long wait for a genuine turn-up in France’s economic and social fortunes.

The past 12 months of politics in the US and UK have taught us to look out for the unorthodox. Macron’s rival Marine Le Pen of the National Front, who has bizarrely stepped down temporarily as party leader in an attempt to widen support, represents the extreme right but her politics should not affect our judgement. She polled 21% in the first round, ensuring neither of France’s two established parties on the right and left made it through to the run-off.

Le Pen is expected to trail on Sunday, handicapped by a general ‘anyone but Le Pen’ campaign that saw her father Jean-Marie defeated by an overwhelming 82%-18% against President Jacques Chirac in the run-off presidential vote in 2002. His daughter is expected to lose by a much smaller margin this time round. At the weekend she sought to bolster her support by downgrading her euro departure policy. She said that the priority would be to organise, over 18 months, a co-ordinated return to national currencies in the euro area. She had previously set a six-month deadline.

National Front will gain seats in the parliamentary elections in June. Even in France’s centralised system which gives the president immense powers, the far right will have sufficient nuisance value to represent a source of risk and disruption for a President Macron. 

Votes for Macron and the defeated mainstream Socialist and centre-right candidates on 23 April added up to just 50%. Le Pen plus the far-left contender came to 41%.

The crucial difference between the two presidential rivals is that Macron does not have a political party of any size. He founded and leads En Marche! (On the move). One could say that he became a leader first and then recruited a party. His members are mainly young metropolitans. Le Pen on the other hand has a big party with a country-wide organisation. The National Front has fought many elections and will have prepared for the second round.

Macron wants to take France in the direction of a more liberal, market-friendly economy. This may please the markets but not the people. The outgoing President François Hollande’s labour market reforms have been bitterly fought by his supposed friends from the trade unions.

Macron is from the establishment: a banker and former economy minister with a pro-Europe mindset. He will be seen as a young elitist candidate. Le Pen will chime with the idea of French pride, reluctance to reform and a tendency to blame outsiders for France's problems rather than impose any hardship. She is not metropolitan and the majority of French are not either. Whatever happens on Sunday, Le Pen will remain a potent force. We should not crow too loudly over a Macron win.

Lord (Meghnad) Desai is Emeritus Professor of Economics at the London School of Economics and Political Science, and Chairman of the OMFIF Advisers Network. He is author of Trump: The First One Hundred Days, which was published on Saturday by OMFIF Press.


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