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Marrakech – In a stunning upset, France’s left-wing New Popular Front (NFP) alliance emerged victorious in Sunday’s legislative elections, sending shockwaves through financial markets and casting doubt on the country’s economic trajectory.
The euro slipped 0.3% in early Asian trading as investors grappled with the implications of the unexpected result.
According to the French Interior Ministry, the NFP secured 182 seats in the 577-seat National Assembly, while incumbent President Emmanuel Macron’s centrist Ensemble alliance claimed a disappointing 163 seats.
The far-right National Rally (RN), which had been tipped to perform strongly, finished third with 143 seats.
The outcome marked a humiliating defeat for Macron, prompting the resignation of Prime Minister Gabriel Attal. With no party securing an absolute majority, France faces the prospect of a hung parliament and a period of political uncertainty.
Markets, which had recently rallied on the belief that the RN would fall short of an absolute majority, now confront fresh concerns over the NFP’s economic agenda.
The leftist alliance, led by veteran politician Jean-Luc Mélenchon, has pledged to boost public spending by €150 billion, financed through higher taxes on the wealthy.
Among the NFP’s proposals are a 10% pay rise for civil servants, a 10% increase in housing subsidies, and the hiring of more teachers and healthcare workers.
The alliance has also vowed to repeal Macron’s unpopular pension reforms, which raised the French retirement age, and raise the minimum wage.
While Mélenchon’s France Unbowed party represents the largest component of the NFP, questions remain over the alliance’s cohesion and its ability to form a stable government.
Some analysts suggest that any attempt to cobble together a ruling coalition might seek to exclude France Unbowed altogether, given its more radical positions compared to other NFP members like the Socialists and Greens.
The NFP’s emphasis on state spending has rattled investors, particularly given France’s already strained public finances. The country’s deficit ballooned to 5.5% of economic output in 2023, well above the government’s 4.9% target and the European Union’s 3% ceiling.
Alexandre Ouizille, an NFP official, sought to reassure markets ahead of the vote, insisting that the alliance would not increase the deficit, but adding, “We won’t reduce it.”
As trading in French bonds and stocks resumes on Monday morning, investors will be closely monitoring developments in Paris to gauge the potential impact on fiscal stability.
The euro’s early stumble underscores the heightened sense of uncertainty surrounding France’s economic future.
The election result also carries significant implications for the wider European Union. A shift towards greater state intervention and a potential clash with Brussels over budget rules could strain France’s relations with its EU partners and unsettle the bloc’s delicate political balance.
Stance on Palestine
On foreign policy, the NFP has pledged to “immediately recognize” a Palestinian state and push for Israel and Hamas to a ceasefire in Gaza, positions that could create friction with some of France’s allies.
Mathilde Panot, a France Unbowed lawmaker re-elected in the Val-de-Marne, reiterated the NFP’s commitment to recognizing Palestine, stating, “Within the next two weeks, we will recognize the State of Palestine.”
The coalition also plans to support the International Criminal Court’s proceedings against the government of Israeli Prime Minister Benjamin Netanyahu.
French Moroccans embrace left
The left-wing coalition’s strong support for Palestinian rights and opposition to the Israeli offensive on the besieged Gaza Strip played a crucial role in its victory among French voters residing in Morocco, according to the French newspaper Le Monde.
In contrast to the results in France, where the far-right National Rally party dominated in over 90% of municipalities, French voters in Morocco overwhelmingly cast their ballots for the France Unbowed party during the European elections on June 9, 2024.
As the dust settles on this seismic political upheaval, all eyes will be on the NFP and its ability to navigate the challenges of governing a deeply divided nation.
For Macron, the outcome represents a stunning reversal of fortune and a stark reminder of the volatile nature of French politics.
The coming days and weeks will be crucial in determining the direction of Europe’s second-largest economy and the ripple effects across the continent.
The French election came just days after the UK’s center-left Labour Party won a landslide majority, ending 14 years of Conservative rule. Spanish Prime Minister Pedro Sanchez praised both results as a rejection of the far-right and an embrace of progressive policies.
Read also: France Votes in Decisive Second Round of Legislative Elections
