July 20, 2024

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What would a far-right or leftwing government mean for France’s economy?

2 min read

France’s far-right and hard-left parties have for years made generous spending promises in answer to people’s grievances against President Emmanuel Macron and his centrist government.

Now they may come first and second in snap elections for the National Assembly on June 30 and July 7, with Macron’s alliance a distant third, according to opinion polls.

The possibility of the far-right Rassemblement National (RN) in government, victory for the leftwing New Popular Front (NFP) alliance or the most likely scenario of a hung parliament full of fiscal populists has rattled investors, business leaders and France’s EU partners.

What is the far right promising to do?

“Will the next government compromise or will it go crazy? If they go crazy . . . then it’s a massive crash,” said Silvia Ardagna, chief European economist at Barclays.

Marine Le Pen fought the 2022 presidential election with spending promises that would have cost more than €100bn (all figures are per annum), mostly to ease the cost of living crisis. Her RN party has yet to issue a formal programme, although it says it will confirm its priorities closer to polling day.

Jordan Bardella, the party’s president and candidate to be prime minister, has used this ambiguity to water down some RN pledges in recent days — and fight Macron’s argument that he would plunge France into a debt crisis. But even the measures he plans to keep would leave a big fiscal hole.

Bardella says one priority is to cut value added tax on energy and fuel, which is estimated to cost between €10bn and €17bn — a measure that would need Brussels’ approval. But he delayed an earlier pledge to drop the VAT on household essentials on Monday.

Bardella also says he would repeal Macron’s hard-won pension reforms and reverse the retirement age from 64 back to 62 at some undefined point starting “from the autumn”. That was expected to generate a €12bn to €13bn hole, said Éric Heyer, director of the…

2024-06-19 06:09:38

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