Shift to the right in new elections?
Finance Minister Le Maire warns of financial crisis in France
14.06.2024, 11:54 a.m.
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Fears are growing on the financial markets that France could get a right-wing government after the new elections. Finance Minister Le Maire is also not ruling out the possibility of a new euro crisis.
France’s Finance Minister Bruno Le Maire warns that the country could slide into a financial crisis in the wake of the new elections called by President Emmanuel Macron. When asked whether the current political situation in the Eurozone’s second-largest economy could lead to a financial crisis, Le Maire answered “yes” on radio. He pointed out that France already has to pay more than Portugal to service its debts. The risk premium that investors demand for French government bonds has climbed to its highest level in more than four years.
Some financial markets are concerned about the parties’ election manifestos. Marine Le Pen’s eurosceptic and right-wing populist Rassemblement National (RN), which is currently leading in the opinion polls, is calling for a reduction in the retirement age and a protectionist economic policy based on the motto “France first”. According to the rating agency S&P Global, the policy advocated by the party could have implications for the country’s creditworthiness, which is why it recently downgraded France.
A newly formed alliance of the French left also announced that it wanted to lower the retirement age. It is also planning a new wealth tax for the rich. Both sides would thus reverse Macron’s pension reform. Despite massive protests, the retirement age in France was raised from 62 to 64.
According to polls, the RN will win the elections on June 30 and July 7. However, the party will not achieve an absolute majority. Macron ordered an early parliamentary election at short notice after the European elections, after his alliance was clearly defeated by the RN. Macron himself refuses to resign from the presidency. According to a poll published on Thursday, the RN received around 31 percent of the vote, the united left 28 percent and the government camp 18 percent.
The fear of a RN victory in the new elections is scaring away stock investors in Paris. The French leading index CAC 40 lost up to 1.5 percent in the morning – the prices of major French banks such as Societe Generale, BNP Paribas and Credit Agricole are particularly under pressure, with shares down by up to 3.6 percent. The European sector index lost 1.3 percent. According to stock market experts, investors are worried that a national debt crisis could arise if the RN takes over the government.