One of the most unpredictable elections in French history has seen Emmanuel Macron, 39-year-old leader of the newly-founded En Marche party, defeat Front National candidate Marine Le Pen to win the presidency. The former investment banker, whose agenda is staunchly pro-EU, won with a landslide 65%, a 30-point margin over the far-right Ms Le Pen.
International markets appeared to breathe a sigh of relief as the weekend closed, with the euro pushing up against the dollar, surpassing $1.10 for the first time since the US election result last November. Investors are largely welcoming the centrist economic reformer, who has pledged labour market reforms and a commitment to globalism. Ms Le Pen’s protectionist and anti-EU stance, along with her promise of “monetary sovereignty” and desire to take France out of the euro, would have been the biggest market shock since Brexit, many experts feared. “We took one of the biggest risk events of the year off the table,” Tom Hainlin, global investment strategist at Ascent Private Capital Management, told CNBC News.
Paul Laudicina, chairman of consulting firm AT Kearney’s Global Business Policy Council, says this bodes well for investor confidence in France. “France rose one spot to seventh place in our 2017 FDI Confidence Index. We’ve seen a strengthening in equity and currency markets around Emmanuel Macron’s victory, but FDI decisions typically take a longer time to materialise and so it remains to be seen how Macron will affect France’s FDI inflows as president,” he remarked. “However, the expectation that Macron will pursue liberal, orthodox economic policies should bolster France’s attractiveness as an FDI destination.”
While the presidency has been won, France’s parliamentary elections in June will provide more challenging. En Marche is likely to fall short of an absolute majority and therefore will be forced to rely on centre-right establishment party Les Républicains, their primary competition, to govern.
“Whether Les Républicains or En Marche come first, Macron will get his first batch of labour reforms through, despite the high likelihood of strikes as the main unions signal they are still an opposition force in their own right,” says Mujtaba Rahman, managing director for Europe at political risk firm Eurasia Group. “Markets and investors will see this as a good sign, as the rigidity of work contracts has become a significant problem for France’s international reputation.”
He adds: “Passing this reform does not guarantee that Macron’s presidency will yield further reforms.” Mr Macron has yet to prove to the 48% of voters who did not vote for him in France’s first round of elections in April that his reforms have their economic interests at heart.