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France’s Macron calls election his far-right rival Le Pen could win

French President Emmanuel Macron.

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French President Emmanuel Macron’s decision to call early national elections after a surge in votes for his far-right rivals is a high-risk move and a huge political gamble, analysts say.

Macron’s decision to call an early parliamentary vote comes after the right-wing National Rally (RN) party, led by Marine Le Pen, won around 31% of the vote in Sunday’s European Parliament elections. That was more than double the 14.6% seen for Macron’s pro-European, centrist Renaissance Party and his allies.

France’s CAC 40 fell 1.8% in early trading on Monday morning and French banks traded sharply lower. BNP Paribas and Societe Generale led the Stoxx 600losses, both with a drop of around 6%. He euro also fell around 0.4% compared to the dollar in the midst of uncertainty.

“This is an essential moment for clarification,” Macron said in a national address Sunday night announcing his decision to dissolve parliament.

“I have heard your message, your concerns and I will not leave them unanswered… France needs a clear majority to act in serenity and harmony,” he added. The first round of voting will take place on June 30 and the second on July 7.

Your party could lose

As things stand, Macron’s Renaissance Party has 169 seats in the lower house of the French parliament, out of a total of 577 seats, and the RN has 88 seats.

An Ipsos poll of 4,000 people asked about their voting intentions last December suggested the RN could win between 243 and 305 seats, giving it a majority in Parliament.

If we saw that result in the next election, Le Pen would likely become prime minister and have a significant say over France’s domestic and economic policy, although Macron – as president – ​​will remain in charge of foreign policy, justice and defense. .

Daniel Hamilton, a senior fellow at the Johns Hopkins University Foreign Policy Institute (SAIS), described Macron’s decision as the “big story” of the European Parliament’s largest vote in recent days, and one that could easily lead to a seismic shift. in the government of France. in which Macron “would have to govern with his nemesis, basically.”

“Their bet is to use the three years leading up to the next presidential election to show that they did a really bad job and that somehow voters will reward them, so it’s a huge political gamble and will create a lot of uncertainty in France.” he told CNBC on Monday.

Macron will make a

“Although a lot can happen in the coming weeks, the information available suggests that Macron has called an election that he could lose,” said Antonio Barroso, deputy director of Research at consultancy Teneo in a note on Sunday night, saying that Macron ” “He was probably trying to make the best of a bad political situation.”

Barroso believed that Macron would probably “try to use the impact of the RN’s big victory in the EP elections to mobilize the centrist electorate and limit the likelihood of Le Pen obtaining an absolute majority in the AN (the National Assembly, the lower house of the parliament). “The RN could still lead a minority government, but a fragmented parliament would make it difficult for an RN-led government to pass laws,” he said.

Far-right makes strong gains in EU elections while center maintains majority

Barroso believed that Macron’s motive for calling early elections was perhaps to bring forward a National Rally victory “in time to expose the party’s lack of experience in government and make them face politically painful decisions before the 2027 presidential election.”

He noted, for example, that if Le Pen’s party led the next government, it would have to pass spending cuts or tax increases (or both) as part of the 2025 budget in the fall to reduce France’s large budget deficit (of 5.5% of GDP in 2023).

“This would be an important test for Le Pen as she has increasingly presented herself as fiscally responsible to appeal to center-right voters,” he said.

Arrogance or wit?

Analysts wonder whether Macron’s decision demonstrated strategy and political sense, or whether it will expose him to more accusations of arrogance and lack of understanding of voters’ concerns on domestic issues such as immigration, public services, the cost of living. and employment.

“The question everyone was asking all night was, ‘Why? Why did he do it?'” Douglas Yates, a professor at the American Graduate School in Paris, told CNBC on Monday.

“Either his critics are right and he is so arrogant that he doesn’t understand how hated he is, and he is going to take a beating in (some form of) divine justice, or he is a clever strategist and has calculated that he can win or “Even if he loses these elections, your long-term strategy will benefit,” Yates said.

Describing Macron’s decision as a “big gamble”, analysts at Deutsche Bank believed the president “probably hoped to regain some momentum and hope that a notable part of the EP results would be a protest vote and also encourage others.” centrist parties to help unite to “Limit the accusation against Le Pen.”

“Their other hope would be that if RN has a bigger role in the government, its appeal could diminish before the next presidential election in 2027. So (it’s) a big bet.”

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