Investor concerns mount ahead of French snap elections

Investors are concerned about the possibility of a politically extreme party, lacking significant government experience, coming to power following France’s parliamentary elections, Euronext CEO Stephane Boujnah stated on Tuesday.

The far-right National Rally (RN) party appears poised to secure the highest number of votes in upcoming snap parliamentary elections scheduled for June 30 and July 7. There is a possibility that they could lead France’s next government, while a left-wing coalition named New Popular Front is expected to follow closely in second place.

President Emmanuel Macron, aiming to project stability, warned in a recent podcast that both the RN and the left-wing New Popular Front could provoke “civil war” in France if elected. RN leader Marine Le Pen countered, accusing Macron of personifying chaos since his election.

Macron’s surprise announcement of snap elections earlier this month triggered significant market turbulence, with French stocks and bonds experiencing a heavy sell-off. Boujnah underscored France’s economic vulnerability to fluctuating interest rates on its sovereign and corporate bonds, necessitating substantial borrowing from global markets.

Investors and rating agencies have expressed unease over RN’s proposed policies, including a VAT cut on energy and lowering the retirement age, without clear fiscal plans. RN’s financial representative, Jean-Philippe Tanguy, defended their platform, stating their proposed pension reforms would cost the state €9 billion but would be balanced by other measures.

With the elections approaching, financial markets are closely monitoring developments that could impact economic stability and investor confidence in France.

Attribution: Reuters.