What would a far-right or leftwing government mean for France’s economy?
Both political forces have lavish spending plans that are spooking investors
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 independent economic body OFCE. The RN wants to further lower the retirement age to 60 for those who have worked for at least 40 years — a measure Bardella says would cost €1.6bn.
The RN leader pledged to first carry out an independent audit upon taking power before pursuing other costly measures. “We are going to find lots of skeletons in the closet,” he said.
How would the RN finance its plans?
The RN’s ideas are either implausible or small-scale, say economists. The party claims it would lower France’s contributions to the EU budget by €2bn — but if it tried that, Brussels could limit the EU funds that Paris is receiving.
The RN has previously said it would save €9bn by reducing immigration and cutting welfare payments and healthcare for foreign nationals.
One fiscal measure it has identified is ending tax breaks for maritime shipping companies, including French giant CMA CGM. Those were worth €5.6bn last year, but that amount was based on record turnover during the Covid-19 pandemic, and stood at €3.8bn in 2022.
RN has also said it could save €15bn by tackling fraud. But Heyer said this policy was too vague: “When they say that they are going to fight against fraud to finance their programme, it shows that they don’t have any idea how to finance it.”
Bardella acknowledged the RN had more work to do, saying recently: “We are in the process of identifying possible savings in government misspending”.
What are the plans of the leftwing NFP bloc?
The NFP has a radical tax-and-spend agenda heavily inspired by the populist far-left La France Insoumise (also known as France Unbowed or LFI).
Valérie Rabault, a Socialist candidate who is part of NFP and a former rapporteur on the French budget, told business daily Les Echos that the programme would cost a total of €106bn. Some LFI members have said even that estimate was too low.
The NFP has pledged to increase public sector wages, with Macron’s alliance estimating the measure would cost €20bn. Like the RN, the NFP would revert to 62 as the pension age, although some on the far left want to push it to 60.
It would also seek to raise the minimum pension to the same level as the minimum wage — a plan estimated to cost €25bn, according to numbers from LFI shared with the Institut Montaigne think-tank two years ago.
The left would also fund 500,000 childcare places costing €28.5bn over five years, according to the Institut Montaigne, as well as subsidise energy and increase spending on culture and sport.
How can the left pay for its spending plans?
Taxes and more taxes. Unlike the RN, it has at least offered several revenue-raising ideas to fund its plans. It would reinstate and increase the wealth tax, increase inheritance tax, reimpose an exit tax on wealthy people who move their tax residence out of France, and raise income tax and social tax payments for top earners. It would also scrap some tax breaks and credits for companies.
Manon Aubry, a far-left MEP and senior member of the NFP, said that the group’s “budget would be balanced by the end of the term”.
But can squeezing the rich really pay for such a programme? If Macron had not changed the wealth tax in 2018, it would have raised only €6bn last year, according to a government study.
Anne-Laure Delatte, at the National Council for Scientific Research, which is helping the NFP with its economic policies, said a much more progressive wealth tax — at 0.5 per cent on fortunes above €5mn, rising to 3 per cent above €1bn — could raise €15bn to €30bn a year. In total, her team believes various tax rises could bring in €54bn to €95bn.
“Half of the deterioration in France’s deficit since 2017 is from tax cuts unmatched by spending increases,” Delatte said.
But tax as a share of GDP in France is already higher than anywhere else in the OECD and the left’s programme risks cratering business confidence, undermining the economy.
How does this compare with Macron’s plans?
The far right and hard left are both promising a radical break with Macron’s pro-business agenda at the same time as blaming him and his government for a deficit that has ballooned to 5.5 per cent.
Macron’s centrist alliance has pledged a few minor giveaways to help with cost of living pressures but it is sticking to a pledge not to raise taxes. Its campaign message is that it is the only fiscally responsible party.
Before the snap election, the government was looking for a further €10bn of savings this year, after reductions of €10bn were announced in January. It said it would need to find at least €20bn next year.
“The left would cause capital flight and the far right would cause a debt crisis,” said Ludovic Subran, chief economist at Allianz. “And a technocratic government [in a hung parliament], a little bit of both. The French risk premium may not recede anytime soon.”
China’s central bank chief warns of weaker credit growth as property lending declines
‘Many loans in China are not efficient,’ Pan Gongsheng tells major financial forum
China’s central bank chief has warned markets to expect weaker credit growth, in a speech that highlighted the impact of a prolonged property slowdown on the world’s second-largest economy.
Pan Gongsheng, governor of the People’s Bank of China, told a major financial forum in Shanghai that real estate and local government financing vehicles account for a large share of China’s Rmb250tn ($34.5tn) of bank lending. “Not only is this area no longer growing, but it is actually declining,” he said.
“It is natural that the growth rate of credit has declined alongside a shift from high-speed to ‘high-quality development’,” he told the Lujiazui Forum, referencing the high volume of existing lending. “Many loans in China are not efficient,” he added.
The comments from Pan, who has led the PBoC since 2023, reflect a broader official focus on the search for new growth, with a real estate slowdown that began in 2021 continuing to weigh on economic activity.
New data this week showed that new home prices in China fell 0.7 per cent month on month in May, the fastest rate of decline in a decade, adding to concerns for policymakers a month after they unveiled a plan for government enterprises to purchase excess properties directly.
Official data on “total social financing”, a broad gauge of credit growth, has also shown signs of weakness this year. It showed a rare credit contraction in April, its first decline since comparable data began in 2017, according to PBoC releases, while new data released this week showed a weaker than expected rebound in May.
Slower than expected expansion of new loans this year has added to signs of sluggish business activity and weak credit demand. Household loans, a proxy for mortgages, have also been shrinking on the back of weak confidence in the property market. Pan said in his speech it would be difficult for the growth rate of all credit to exceed 10 per cent, as it had in the past.
Markets have closely watched the government’s monetary approach, which has largely remained cautious, despite calls for greater stimulus in an environment where prices have frequently entered deflationary territory.
Official borrowing rates have been gradually cut over recent years, and a medium-term lending facility rate was left unchanged on 2.5 per cent on Monday.
Analysts at CreditSights this week said they expected the reserve ratio requirement, which influences bank lending, to be cut by a further 20 basis points, although they added this could be delayed to later this year, given depreciation pressure on the renminbi.
Pan said in his speech that the PBoC was not changing its stance, which he said was supportive, and added that measures to further regulate market behaviour would help improve the efficiency of monetary policy transmission.
Zhou Hao, an analyst at Guotai Junan Securities, said in emailed comments that the PBoC was “avoiding the perception of aggressive easing that could fuel inflation or financial stability risks,” and was also “using a range of monetary tools to fine-tune monetary conditions”.
Olivier Faible, l'édito de Raphaël Enthoven
par Raphaël Enthoven
Dès qu’il faut aller à la soupe, c’est lui qu’on envoie. Car aucune couleuvre ne résiste au gosier sublime d’Olivier Faure. On peut s’essuyer les chaussures sur lui, le traiter de tous les noms, faire la guerre à son parti, dessiner des croix gammées sur sa tête de liste, couvrir d’insultes sa colistière parce qu’elle est juive et déclarer publiquement, comme Mélenchon, qu’on « ne l’aime pas »… Rien n’y fait. Si Olivier Faure a besoin de vous pour conserver son strapontin (et son groupe parlementaire), il oubliera tout, il passera l’éponge, il vous dira son fait avant de mendier votre soutien, il montrera l’échine et s’inclinera sans condition devant chacune de vos exigences, laissant le spectateur perplexe face au constat que, décidément, il n’existe pas de tyran sans esclaves.
De Jean-Luc Mélenchon, au gré de la situation, Faure a dit du mal avant de dire du bien pour en dire du mal de nouveau avant de considérer, désormais, que les gens qui l’attaquent « préfèrent Hitler au Front populaire ». L’antisémitisme « résiduel » ? Poutine ? Le Hamas ? Faure « s’indigne », mais refuse de « laisser penser que ça devrait justifier sa disqualification ». Qu’on se le dise : rien ne résiste à l’homme qui se couche. On n’arrête pas un contorsionniste avec des principes.
En 2022, le PS faisait le treizième du score des Insoumis à la présidentielle. Il était normal, dans ces conditions, que la répartition des circonscriptions se fît nettement à l’avantage des mélenchoniens. Mais, en 2024, la liste conduite par Raphaël Glucksmann a sèchement battu la liste de Manon Aubry. Qu’importe ! Les Insoumis auront de nouveau (quoique dans de moindres proportions) plus de candidats que leurs partenaires. Tel est Olivier Faure, capable de se coucher devant plus faible que lui. Faure est à lui tout seul une disposition du caractère. L’ambition par l’abaissement. La conquête par la concession. Olivier Faure, c’est la position démissionnaire.
Mais, en cela, Faure est vraiment à sa place au Parti socialiste, dans ce groupuscule de veules prompts à se vendre et à se rendre. La reddition de leur tête de liste, Raphaël Glucksmann, à qui son intransigeance (de façade) a valu quantité de malédictions insoumises pendant la campagne, renseigne sur la raison d’être de ce parti absurde : fournir à l’électorat des candidats mous et pondérés, qui captent les voix de la bourgeoisie pour les offrir ensuite en dessert à l’ogre insoumis. J’en veux pour preuve la différence de traitement entre Olivier Faure et Éric Ciotti.
Parce qu’il avait besoin de ses voix dans sa circonscription niçoise, Éric Ciotti a tenté d’entraîner Les Républicains dans l’alliance avec le RN. Mal lui en a pris, et le forcené a été démis de ses fonctions. Les Républicains ont le sens de l’honneur.
Parce qu’il n’avait aucune chance d’être élu en Seine-et-Marne avec un Insoumis face à lui, Olivier Faure a entraîné son parti dans une nouvelle alliance avec le premier parti antisémite de France. Mais au lieu d’être viré manu militari par un bureau politique indigné, Faure a été suivi comme un seul homme par tous les salariés de sa PME. Ainsi sont les socialistes. Des moutons vénaux guidés par un grandgousier dont, historiquement, le seul mérite est d’avoir réinventé l’opportunisme : non plus retourner sa veste, mais se retourner (et baisser son froc) pour ne pas prendre une veste.
>>> Up
* Acciona Energia Raised to Outperform at Renta 4; PT 27.21 euros (+)
* Accor Raised to Overweight at Barclays; PT 48 euros
* Avacta Group Raised to Hold at Deutsche Bank (+)
* Beiersdorf PT Raised to 185 euros from 150 euros at M.M. Warburg (+)
* E.On Raised to Outperform at Grupo Santander; PT 15 euros
* GEA Group Raised to Buy at Jefferies; PT 52 euros
* Grifols Raised to Hold at Deutsche Bank; PT 9 euros
* Resurs Holding Raised to Hold at SEB Equities; PT 23.50 kronor
* Resurs Holding Raised to Hold at SEB Equities; PT 23.50 kronor
* Schibsted Raised to Overweight at JPMorgan; PT 364 kroner
* SKF Raised to Outperform at Oddo BHF; PT 260 kronor (+)
* Telecom Plus PT Raised to 3,180 pence at Deutsche Bank (+)
* Umicore Raised to Overweight at JPMorgan; PT 16.50 euros
>>> Down
>>> Down
* British Land Cut to Hold at Stifel; PT 450 pence
* Kering Cut to Add at AlphaValue/Baader
* Kone Cut to Hold at SEB Equities; PT 51 euros
* Kone Cut to Hold at SEB Equities; PT 51 euros
* Fiskars Cut to Hold at SEB Equities; PT 16 euros
* Hargreaves Lansdown Cut to Hold at Jefferies; PT 1,140 pence
* Ringkjoebing Landbobank Cut to Hold at ABG; PT 1,110 kroner
* Segro Cut to Hold at Jefferies; PT 950 pence
* SMA Solar Cut to Neutral at Oddo BHF; PT 41 euros (+)
* Solaria Energia Cut to Sell at Bestinver; PT 10.50 euros
* Spar Nord Raised to Buy at ABG; PT 145 kroner
* Zentalis PT Cut to $20 from $40 at HC Wainwright
>>> Initiation
>>> Initiation
* Autostore Rated New Sell at SEB Equities; PT 11.50 kroner
* Carmat Rated New Buy at Euroland Corporate; PT 6.80 euros (+)
* GEA Group Upgraded at Jefferies on Expected Order Intake Rebound
* KWS Saat Rated New Buy at Baader Helvea; PT 79 euros
* KWS Saat Rated New Buy at Baader Helvea; PT 79 euros
* Olav Thon Eiendomsselskap Rated New Buy at SpareBank
* Rockwool Rated New Neutral at Citi; PT 3,000 kroner
* SGS Rated New Neutral at CIC
* Vodafone Resumed Buy at Deutsche Bank; PT 140 pence (+)
>>> Call
>>> Call
* Accor’s Underperformance is Unjustified, Barclays Upgrades (+)
* Brenntag Could Fall as Berenberg Sees Potential Guidance Miss (+)
* Games Workshop Results Ahead of Expectations, Says Peel Hunt (+)
* Logitech Indicated Higher After Stifel Lifts PT on Gaming Growth (+)
* Logitech Indicated Higher After Stifel Lifts PT on Gaming Growth (+)
* SGS Rated New Neutral at CIC as CEO Seen Turning Business Around (+)
- Umicore (NVJP TH) +3.6%
- Umicore Raised to Overweight at JPMorgan; PT 16.50 euros
- GEA Group (G1A TH) +2.1%
- GEA Group Upgraded at Jefferies on Expected Order Intake Rebound
- Accor (ACR TH) +1.6%
- Accor Raised to Overweight at Barclays; PT 48 euros
- Getlink (TNU3 TH) +1.5%
- Ashtead (0LC TH) +0.9%
- Wacker Chemie (WCH TH) -2.1%
- Vestas (VWSB TH) -2.3%
- Dassault Systemes (DSYA TH) -2.4%
DAX:
- E.On (EOAN TH) +0.6%
- E.On Raised to Outperform at Grupo Santander; PT 15 euros
MDAX:
- GEA Group (G1A TH) +2.6%
- GEA Group Upgraded at Jefferies on Expected Order Intake Rebound
- Kion (KGX TH) +1.1%
- Jenoptik (JEN TH) -1.6%
- Wacker Chemie (WCH TH) -1.8%
- SMA Solar (S92 TH) -30%
- SMA Solar Cuts FY Ebitda Forecast
SDAX:
- RENK Group AG (R3NK TH) +1.2%
- AUTO1 (AG1 TH) -1.5%
Asian equities rose Wednesday after a surge in chipmakers drove US stocks to yet another record-breaking session on Wall Street. The MSCI Asia Pacific index advanced about 1%, with chip and artificial intelligence-related shares leading the advance. Hong Kong stocks rebounded, while mainland Chinese shares slipped as traders digested speeches at the Lujiazui Forum, where securities regulator chief Wu Qing and PBOC Governor Pan Gongsheng are among the speakers. The overall risk-on mood comes after US traders pushed the S&P 500 closer to the historic 5,500 mark, betting the potential for Federal Reserve rate cuts will keep fueling the tech industry. Nvidia Corp. became the world’s most-valuable company — topping Microsoft Corp. — to extend this year’s record-breaking surge. A Bloomberg gauge of the dollar held on to Tuesday’s declines. There’s no trading of Treasuries globally on Wednesday due to a holiday in the US. China’s 10-year bond yield fluctuated after PBOC Governor Pan said the central bank is studying how to implement government bond trading together with the finance ministry. Its 10-year government bond futures closed at a record high on Tuesday. The relentless bull run in the debt market has been a concern for Chinese authorities, with the PBOC issuing several warnings via state media on the risk of a market reversal. In other Asian news, Japan’s exports grew at the fastest clip since late 2022 as the weak yen boosted their value. The yen was little changed after a four-session drop. Overnight, Wall Street waded through mixed economic data that showed US industrial production increased, helped by a broad-based pickup in factory output. Separately, retail sales barely rose and prior months were revised lower. A chorus of Fed officials emphasized the need for more evidence of cooling inflation before lowering rates. n corporate news, Norinchukin Bank, Japan’s biggest agricultural bank, said it will diversify its investment portfolio as it braces for massive losses on the sale of roughly 10 trillion yen ($63 billion) in US and European sovereign bonds. In commodities, oil steadied after closing at a seven-week high as a sustained risk-on mood in wider markets outweighed signs of further stockpile growth. Gold was little changed. US After Hours KBH +2.3% higher on earnings; TREE -0.6% as it names new CFO, also raises Q2 revenue guidance.
Nikkei +0.22% Hang Seng +1.95% CSI -0.42% Shanghai -0.34% Shenzen -0.63%
Eur$ 1.0737 CNH 7.2751 CNY 7.2562 JPY 157.80 GBP 1.2710 CHF 0.8841 RUB 85.75 TRY 32.5836 WTI$ 81.56 Gold 2,328 BTC 65,495 +1% ETH 3,565 +2.8%
S&P +0.04% Nasdaq +0.12% EuroStoxx +0.16% FTSE -0.08% Dax +0.13% SMI
Macro :
- Europe's 2H Auto Sales May Flatten; Tariffs to Slow BEV Uptake
- EU to Slam France Over Budget Deficit, Adding to Political Woes
- Commercial Properties Are Fast Becoming Stranded Across Europe
Keep an eye on :
Keep an eye on :
- AIR FP : Polish Cabinet Analyzing Whether to Join Airbus Consortium: RP
- AMD LN : AMD Is Investigating Claims That Company Data Was Stolen in Hack
- AAL LN : Los Bronces Copper Mine’s Output to Fall 30% in 2025: Reuters
- EnergVision IPO : Energyvision Weighs Brussels IPO: Tijd
- RACE IM : Ferrari’s First Electric Car to Cost at Least €500,000: Reuters
- FLUO SS : Fluoguide Offers SEK60 million Shares, Offering of 1.4m Shares Prices at SEK42.50/Share
- HTWS LN : Helios Towers Holders Offer Shares: Terms
- IDR SM : Cinven Signals Interest in Indra Payments: Confidencial
- BAER SW : Regulatory Concerns Stopped Julius Baer, EFG Talks: Reuters
- Golden Gosse IPO : Permira-Backed Golden Goose Is Said to Postpone Planned IPO
- RMS FP : Hermes Tops Luxury Price Plan as Gap to Kors, Entry Peers Widens
- LMT US : Lockheed Martin Wins $2.27b Contract Awarded by NASA
- EMG LN : Hedge Fund Man Group Hires Barclays Alum Tessa Orlebar for SRTs
- NVDA US : Nvidia Is Said to Reach Deal to Buy Software Startup Shoreline
- QDT FP : Quadient Sees Current Ebit ~€250M in 2030
- SALME NO : Salmon Evolution Offering Prices at NOK7.50/Share
- SRS IM : Varas Launches Mandatory Tender Offer for Remaining Saras Shares
- SK FP : SK On to Supply EV Batteries to Hyundai From Its US Plant: Daily
- S92 GY : SMA Solar Cuts FY Ebitda Forecast
- SHLN SW : Swiss Life REF Plans Capital Increase of ~CHF610M in July
- SCMN SW : Swiss Minister Rösti Sees State Keeping Swisscom Control
- TEN IM : Tenaris Ordered by Brazilian Court to Pay CSN Over Usiminas Deal
- UBSG SW : UBS Among Swiss Banks Seeking Delay of Capital Rules on Trading
- VIE FP : Veolia, IG4 Group said to abandon bid for brazil's Sabesp,
- VWS DC : Vestas Gets 577 MW Wind Turbine Order in Australia
- VISC SS : Gruvaktiebolaget Viscaria Offers Shares
- VISC SS : Gruvaktiebolaget Viscaria Offers Shares
- VOD LN : Indus Towers Shares Drop After 19% Equity Traded in Blocks
- WRT1V FH : Wartsila Invests €20 Million to Expand Technology Hub in FinlandcxwW
>>> Up
* Accor Raised to Overweight at Barclays; PT 48 euros
* E.On Raised to Outperform at Grupo Santander; PT 15 euros
* GEA Group Raised to Buy at Jefferies; PT 52 euros
* Grifols Raised to Hold at Deutsche Bank; PT 9 euros
* Resurs Holding Raised to Hold at SEB Equities; PT 23.50 kronor
* Resurs Holding Raised to Hold at SEB Equities; PT 23.50 kronor
* Schibsted Raised to Overweight at JPMorgan; PT 364 kroner
* Umicore Raised to Overweight at JPMorgan; PT 16.50 euros
>>> Down
>>> Down
* Kering Cut to Add at AlphaValue/Baader
* Kone Cut to Hold at SEB Equities; PT 51 euros
* Kone Cut to Hold at SEB Equities; PT 51 euros
* Fiskars Cut to Hold at SEB Equities; PT 16 euros
* Hargreaves Lansdown Cut to Hold at Jefferies; PT 1,140 pence
* Ringkjoebing Landbobank Cut to Hold at ABG; PT 1,110 kroner
* Segro Cut to Hold at Jefferies; PT 950 pence
* Solaria Energia Cut to Sell at Bestinver; PT 10.50 euros
* Spar Nord Raised to Buy at ABG; PT 145 kroner
* Zentalis PT Cut to $20 from $40 at HC Wainwright
>>> Initiation
>>> Initiation
* Autostore Rated New Sell at SEB Equities; PT 11.50 kroner
* GEA Group Upgraded at Jefferies on Expected Order Intake Rebound
* KWS Saat Rated New Buy at Baader Helvea; PT 79 euros
* KWS Saat Rated New Buy at Baader Helvea; PT 79 euros
* Olav Thon Eiendomsselskap Rated New Buy at SpareBank
* Rockwool Rated New Neutral at Citi; PT 3,000 kroner
* SGS Rated New Neutral at CIC
>>> Call
>>> Call
After Hours Summary: KBH +2.3% higher on earnings; TREE -0.6% as it names new CFO, also raises Q2 revenue guidance
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: KBH +2.3%
Companies trading higher in after hours in reaction to news: IPSC +4.7% (stock offering by selling shareholders), FBLG +3.1% (stock offering by selling shareholder), CRSR +2.4% (CRSR and SNX announce new partnership), SNX +0.8% (CRSR and SNX announce new partnership), PR +0.3% (extends registration rights agreement with private equity stockholders; announces further reduction in its sponsor ownership)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: None.
Companies trading lower in after hours in reaction to news: DJT -10.6% (announces SEC effectiveness of Amended Form S-1), HMST -2.5% (HMST shareholders approve merger with FSUN), WDFC -1.3% (non-exec chair to retire, names successor), TREE -0.6% (names new CFO, also raises Q2 revenue guidance), AMD -0.5% (investigates claim from cybercriminal organization that it stole information in a hack, according to Bloomberg), ARBE -0.2% (files for 11,542,497 shares of common stock)