French presidential election: a much more uncertain repeat run-off between Macron and Le Pen

The 1st round of the presidential election in France, saw the centre-right incumbent Emmanuel Macron and Marine Le Pen take the top two places, as in 2017.

The winner between the two candidates will be decided in the run-off election on 24 April, in a vote that is likely to be much more uncertain than 5 years ago. The gap between the 2 candidates had narrowed significantly in the weeks leading up to the 1st round of the election. However, the incumbent remains favourite for re-election.


If Emmanuel Macron is re-elected, the next 5 years should be marked by continuity.

His programme includes the abolition of the contribution on the added value produced for companies (CVAE, EUR 10 billion), the end of the TV license fee (around EUR 4 billion), and the postponement of the legal retirement age from 62 to 65 (a reform that was put on hold because of the pandemic). In the context of inflationary pressures, Macron also proposes to continue to cap the rise in gas & electricity prices, to extend the rebate on fuel prices, and to index pensions to inflation.


The election of Marine Le Pen cannot be ruled out. It would bring a negative reaction in financial markets and doubts about the European stability and cohesion

As illustrated by the fall in French stocks and rise in bond yields a few days before the 1st round, the election of Marine Le Pen can no longer be ruled out. Should this happen, a more negative reaction from the markets is expected, as they see the far-right candidate as less reliable in terms of public finances. Her programme includes, the bringing forward of the retirement age to 60 years for those who started working early (est. cost of EUR 26 billion), the reduction of VAT on energy (EUR 10 billion) and a government loan at zero interest to promote home ownership (EUR 13 billion).

On the revenue side, the bulk would come from several measures excluding foreigners from social benefits. Above all, her election would be seen as a threat to the European Union's political stability and cohesion. Marine Le Pen would challenge the EU by re-imposing border checks, reducing France’s net contribution to the EU’s budget and questioning the supremacy of EU law.


If Macron is re-elected, the legislative elections could be perilous for his party

Should he lose his parliamentary majority, then Macron will be forced to form a coalition government, which would increase the risk of political instability, and reduce his ability to implement his programme. Although parliamentary elections held just after the presidential elections have always offered a majority to the newly elected president, the situation could be different this time, especially in the event of a narrow victory.


Whatever the outcome, the French economy faces a highly adverse environment, the recovery being strongly constrained by the consequences of the war in Ukraine

The surge in commodity prices will bring inflation to its highest level in several decades, weighing on household consumption. At the same time, companies will suffer from substantial cost increases. Business investment is thus likely to be held back by both economic uncertainty and falling profits.