Comfortable victory for pro-eurozone candidate
* Provisional results show centrist independent Emmanuel Macron has beaten Marine Le Pen in the run-off
* His pro-euro stance will relieve markets, the ECB and the EU
* But Macron’s ability to reform France will depend on June’s legislative elections
- A benign outcome for markets but a shake -up of the French political order
In the end, the result w as in line w ith the most recent polls. The centrist independent
Emmanuel Macron has w on the presidential run-of f . The projected result puts Macron
on 65.9% of the vote, w ith Marine Le Pen on 34.1% (according to Elabe). This still
marks a seismic move in French politics, w ith neither of the tw o main parties
represented in the run-of f . Mr Macron's rise to pow er has been as unprecedented as
it w as unexpected. At the start of the year, betting odds gave him a 14% probability of
becoming president. He has started a political movement – En Marche! – f rom
scratch and w ill be France’s youngest president, and one of its most pro-European.
- Mr Macron has a narrow w indow to de live r e conomic grow th…
Macron’s w in should mean markets and European policymakers breathe a sigh of
relief . But as w e have argued (see Happy Birthday to EU?, 24 March 2017), anti-EU
sentiment is still strong across the Union and failure to raise economic prosperity
could mean an even greater populist challenge in f ive years' time.
- … but his ability to re form will de pe nd on June ’s parliamentary elections
For longer-term sustainability, the eurozone needs deeper integration of f iscal policy,
labour markets and capital markets. With such issues politically toxic, bringing the
electorate on board may require economic grow th and rising living standards.
- In our view , Mr Macron has made many of the right noises. He proposes an
enhanced European budget, overseen by a Eurozone f inance minister. On f iscal
policy, he aims to meet EU rules by keeping the def icit below 3% of GDP. He expects
to cut public spending by EUR60bn over the next f ive years and to launch a
EUR50bn investment plan. Labour costs are to be cut by low ering social security
contributions and by giving f irms greater ability to negotiate bilaterally w ith unions on
w orking time and w ages. Unemployment benef its and training schemes w ill be
targeted at low -skilled w orkers, in a bid to curb the high level of structural
unemployment.
- But he has a narrow w indow in w hich to deliver results and his ability to push through
reform w ill depend on the parliamentary elections on 11 and 18 June. Currently, his
new party has no MPs, although a recent poll (of mainland France) suggested it
could w in betw een 249 and 286 France's 577-seat National Assembly, leaving it
close to but just short of an absolute majority.