The low share of the poll obtained by the presidential majority at the European Parlement elections and the decision taken by the president of the Republic to call snap legislative polls at the National Assembly carry the risk to sink France into a major political crisis and to worry financial markets. The prospect of a victory of the far-right parties which for years are criticizing the European Union, after having even proposed to exit from it and to abandon the euro, constitutes a real threat. In case of a lack of majority after these elections, it also opens the possibility of a real political instability, new during the Fifth Republic.

Nothing yet obliged the government to make that poll a test of the support to its action at a national level because the purpose was to choose European deputies who will be members of political groups constituted by elected from the 27 States-members in charge of approving texts in accordance with the Union rules. The poll result in France, which is in line with a general trend in Europe, so was not by nature able to disrupt the equilibriums inside the European Parliament. Unfortunately, the electoral campaign, due to the choices of the government and of the candidates which had been appointed, was focused on the economic and political situation of the country and not on the challenges Europe is confronted with.

The achieved result of the list supported by the majority (14,5% of the expressed votes) is the consequence both of the failure of the economic policy followed for seven years and even in some areas for twelve years, and of its denial by the government which has done nothing else than to increase discontent. France has been confronted with major crisis with the Covid-19 pandemic and the invasion of Ukraine by Russia. The first one has been overcome thanks to huge and justified financial transfers by the State to allow enterprises to surviving. The second one, which has mainly hurt the energy sector, has had heavy consequences on purchasing power due to the past mistakes in that domain with the reduction of the nuclear power production and an unsuitable tariff regulation.

But these two crises couldn’t hide the low growth of the French economy for more than ten years and, especially, its heavy and persisting trade deficit when one of the constant priorities of the governments which followed each other was to re-establish the enterprises competitiveness through important financial transfers in their favor which has contributed to have growing heavy budget deficits and to an unprecedented increase of the public debt.

But to cope with it, the State has not stopped to impose so-called structural reforms, which were limited to an under-indexation of the wages and of the pensions, to a postponement of the departure into retreat and to restrictions regarding unemployment indemnities and social benefits. In the same times, we saw a continuous degradation of the quality of public services when their cost was rising due to a growing bureaucratization.

During that time, and against the minister sayings, always very proud about their action, no progress was accomplished to reduce unemployment: there was still three million of jobseekers having no activity and more than five million looking for a better job or a full-time one. The government was lauding itself of making unemployment rate to fall, in realty back to 7.5% but this statistical concept is purely a theoretical one and influenced by demographic trends. The discontent came from these poor results and has been made worse by the government communication which has not stopped, against the obviousness, to say that everything was going better.

The far-right movements so have been the major beneficiaries of this discontent that the left political forces, divided and having frequently adopted, them too, extremist positions, have not been able to attract. Instead of recognizing the past errors and of taking the lessons from them, it has been decided to call snap elections but the result risks to be in accordance with the European poll, even if the election mode with two rounds is different. The probability of a majority, even a relative one, of the far-right is real with the constitution of a government with, as Prime Minister, a leader of the National Rassemblement.

But the proposals of this party to remedy to the French people discontent are, for most of them, in contradiction with the European rules, regarding immigration, competition, State supports to enterprises and the public finances management. They only could be put into practice after discussions with Brussels, which have a low probability to be successful. In the past, this party had defended the proposal of an exit from the euro and even, for some of its members, from the European Union but now, it had renounced to that. Once into power, nothing allows to being sure that this threat will not be once more held up in order to make its announced measures being accepted. It would then have, due to France financial situation, heavy consequences.

The first one regards interest rates and the debt charge. A simple doubt about keeping France in the eurozone would provoke a brutal increase of the spread with the German rate which is used as a benchmark. When S&P downgraded France notation, there has been no reaction and the spread with the German 10-years bond remained at 48 basis points. Two days after the announcement of the snap elections, the spread increase by 14 points. The tensions between a far-right government and Brussels would provoke new spreads increases and launch a speculative cycle, few different from what occurred with Greece in 2012 during the euro crisis. It would be harbored by every declaration of a member of the new government interpreted as hostile to Europe. The budgetary consequences would be huge with the increase of the debt charge.

The second consequence is about enterprises. Any doubt about France belonging to the European Union which would result from the tensions with Brussels, generated by the application of the Rassemblement National program, would provoke doubts on their investments, on the supply chains and so on their results. The impact on stocks markets would be immediate. Executives would have to redefine their strategies to adapt the enterprise to that new context. They were organized for decades to profit from the unique market. They would have to start a withdrawal move, because they won’t have any more access to it in the same conditions than their European competitors or to launch a wave of de-localizations. Impact on employment risks to be heavy.

The third consequence would be the end of the Common Agricultural Policy, with its guaranteed prices for the producers, the subventions and the access to the 26 States-members markets. The proliferation of norms has affected production costs and constituted a heavy charge for farmers, which has generated justified critics. But the good solution is to convince our partners to put an end to this bureaucratic inflation to recover the advantages the European has brought to the agricultural world and not to imagine that we would profit from an exit.

The call for snap elections was not based on any constitutional rule. The excessive politization of the result of the European elections and the decision which has been its consequence with elections which could lead to the creation of an anti-European government, risks to generate an opposite result to what was expected: instead of reinforcing the central place France occupies inside the European project, it will put the country, in the best case in a marginal position and to the worst one in an expulsion situation.