Macron’s Historic Gamble: How a Snap Election Shook France 🇫🇷

Emmanuel Macron Calls a Snap Election 📈

It was an historic gamble. Emmanuel Macron called a snap election following his party’s crushing defeat in Sunday’s European Parliament elections. And it surprised everyone. Just a month later, we have a hung parliament scenario. For the first time, no one is gaining an absolute majority in the National Assembly.

The Reasons Behind Macron’s Risky Move 🎲

So why did Macron risk it in the first place? If you talk to or listen to his ministers, they will say this is the decision of one man and one made in full view of galvanized opposition parties on the left and, crucially, the right. It was a dangerous election a president didn’t have to call and would trigger panic in the country’s vital bond market.

What Sparked Macron’s Great Gamble? 🔍

Before we get to all the candidates and the uncertainty, let’s start with the economy. What is it about calling a snap election in France that’s led to a reaction like this over the last 24 hours? Investors had spent that time offloading French debt as quickly as they could. Look what happened. That’s the biggest jump in the France bond risk gauge in more than a decade. This very literal measurement of risk is essential in understanding the uncertainty of what’s to come.

Impact on Financial Markets 💹

Investors who buy and sell bonds are really power players in European politics. They’re the ones who lend countries money when they need it most. Remember British Prime Minister Liz Truss? The reason she spent less time in office than some people keep eggs in a kitchen was because her unworkable economic policies spooked the bond markets so much, it sent the UK’s borrowing costs to a 25-year high.

France’s Financial Future 🏦

The last thing France wanted was uncertainty and to be seen as financially risky. After all, the country has been trying to cement Paris as the continent’s leading financial hub in the wake of Brexit. Suddenly, people started questioning whether that would remain the case. If either the far right or the far left comes into power, their concern will not be increasing France’s attractiveness as a financial center. Investors view Germany as the most responsible pair of hands they can possibly get.

The Election’s Backdrop ✨

Let’s go back to the exciting Parisian Spring of 2017. Disneyland Paris had just debuted a new Star Wars ride, and the French public had elected its youngest ever president, 39-year-old Emmanuel Macron. He really was a fresh face for politics here. Macron came to power by destroying the traditional establishment parties on both the right (Republican conservative Party) and the left (Socialist Party).

Macron’s Rise to Power 🚀

At the time, there was a socialist prime minister, who was perceived as quite right-wing and conservative, and Macron was seen as the more left-wing option. Essentially, he drew considerable support from voters who simply disliked the opposition more than him. And seven years later, that support had significantly weakened.

Marine Le Pen’s Rebranding 🦊

Marine Le Pen had tried to rebrand her party, the National Rally, as a less toxic, more electable party since taking over in 2011 from her father, Jean-Marie. Despite her efforts to soften her stance on immigration, Macron took office. However, his elite background didn’t always help.

Public Perception of Macron 🤔

Visiting crowds, a woman talked about how her son was having difficulty finding a job. Macron’s response was seen as very condescending and out of touch with the concerns of normal French people. His plan to raise taxes on fuel also hit low-income people hardest, further watering down his popularity. Despite all the chaos, the economy remained relatively stable – essential for what came next.

Covid and National Debt 💸

Covid shut down the country just as it did many others. The French state did a good job during the pandemic, although the government had to borrow heavily, pushing up national debt to the second highest level among major advanced economies as a percentage of GDP. Then came a big misfire:

Pension Reform Protests 👴👵

Emmanuel Macron’s pension reform, which planned to raise the retirement age from 62 to 64 years old, triggered significant protests. His government’s popularity plummeted every time he mentioned it. At one point, his government was close to being overthrown by a no-confidence vote that failed by only nine votes.

Marine Le Pen’s Strategy 🗳️

Watching from the sidelines of power was Marine Le Pen, who realized that defeating Macron would need more attractive policies and personalities. She ousted her father from the party, toned down divisive opinions by senior MPs, and insisted they start wearing suits and ties. Anything to tell the country that the National Rally was ready to govern.

Political Paralysis 🛑

In the end, French voters delivered another shock. Marine Le Pen’s National Rally was pushed into third place, meaning none of the major parties could form a government. It looked like the country would be essentially ungovernable.

The Aftermath and Future Prospects 🔮

Investors may have avoided the worst-case scenario of an extremist party running one of the world’s most powerful countries, but they remain on edge. The all-important French spread with Germany is still historically very high. With war raging on Europe’s eastern frontier and the region struggling to jumpstart economic growth, France looks politically paralyzed, at least for now, at a time when the continent needs leadership.