No clear majority and a high abstention rate. These are the results of the legislative elections in France, in which the big favourite, the coalition of the winner of the presidential elections, Emmanuel Macron’s ‘Together’, won. However, it falls far short of an absolute majority and raises many doubts and forces, in any case, to seek alliances.
The 54% abstention rate and the considerable electoral success of the left-wing coalition led by Jean-Luc Mélenchon, the New Popular, Ecological and Social Union (Nupes), which places it as the main opposition force, poses a scenario of uncertainty.
Macron’s coalition won 245 seats, far from the 289 seats needed for an absolute majority, so the way to achieve this goal would be through a possible alliance with the conservative Republicans (64 seats), with whom he would reach the support needed for an absolute majority. However, Jean-Luc Mélenchon has hastened to announce a motion of censure that he will present in July against Macron’s government.
Given this uncertain scenario, we ask ourselves what fund managers think and what analysis they make of the economic outlook for France.
Pietro Baffico, European Economist, abrdn
The second round of the French legislative elections gave way to a hung parliament, leading to a significant slowdown in the reform agenda. Cabinet reshuffle and negotiations will follow over the next weeks, potentially even leading to a new Prime Minister to facilitate a coalition government with the Les Republicains.
But the conservatives are split internally, thus a coalition government is not a given. If no stable majority is formed, a more complicated alliance with the centre-left may arise, but with more risks for government crises. A minority government might need to seek a bill-by-bill support, and policy paralysis could emerge. In that case, the risk of new early elections would also not be ruled out.
Macron’s reform agenda will be significantly diluted. While Les Republicains would support measures close to their programme, they would also require concessions, limiting social spending and aiming for a stricter fiscal discipline. The President retains control of foreign and defence policies, albeit will likely face more opposition on further EU integration. The political pressures arising from the cost-of-living crisis will likely strengthen his efforts to push for a diplomatic compromise on the war in Ukraine.
These elections are a demonstration of political challenges in an inflationary environment. Voters were more disengaged, with a record low turnout around 46%, and more discontent with the incumbent President than in 2017, as reflected by the high voter abstention in the presidential runoff. Centrist and moderate parties come out in a weakened position, while there was historically high support for populist parties, most notably the far-right, amid the ongoing cost of living crisis. The result is a fragmented political spectrum, with parties forced to compromise on policies to avoid paralysis.
Thomas Gillet, Associate Director, Sovereign and Public Sector Ratings at Scope Ratings
Far-left parliamentary majority in France would aggravate rather than meet the challenges facing French public finances, with expansionary fiscal policy partly funded through borrowing which would become increasingly costly as interest rates rise.
The possibility of a coalition of Socialist, Green, Communist and far-left parties achieving such a breakthrough and challenge President Emmanuel Macron for control of the National Assembly has increased after the first round of the country’s legislative elections on Sunday. However, opinion polls suggest gains made by the New Ecological and Social Popular Union (Nupes) will likely fall short of a majority after next Sunday’s second-round vote. It remains our baseline that Macron will obtain a majority, though not necessarily an absolute one.
Even so, political fragmentation in France, with extremes of left and right emerging as main alternatives to Macron’s centrist Renaissance party and its Ensemble coalition in parliament, has made the outcome of the legislative elections more uncertain, with potentially adverse consequences for French public finances.
Pedro Blanchet, Investment Intelligence Director at Amundi Institute and Vincent Mortier, Investment Director Amundi Group
What are the key takeaways? The results of the second round of parliamentary elections represent a huge setback for Ensemble, the movement that supports Emmanuel Macron. The presidential party won only 246 seats in the National Assembly, losing the absolute majority it had previously held (including the dissidents).
Ensemble will need 43 additional members to reach the 289 majority threshold. Reaching this won’t be easy. The unprecedented situation in the Fifth Republic paves the way for a complex and uncertain political phase.
Indeed, this second round, with a record low turnout (46%), gave 142 seats to the leftist NUPES coalition, which campaigned against Emmanuel Macron’s liberal policies during his first term and his programme for the next five years. Although across this heterogeneous group, composed of the extreme left, environmentalists and socialists, some MPs may eventually join the presidential movement, it is unlikely that many will rally to it in the short term. It is not clear whether this movement formed for the purpose of these parliamentary elections will become a parliamentary group as such.
The second big surprise was the important scoring of the Rassemblement National (RN), which, with 89 seats, is in a strong position to become a key element of the opposition. Ironically, the Les Republicains-UDI group has been losing momentum since 2017, with 64 of its members elected. This is the majority in the Senate and thus currently the only potential ally for Ensemble. Nevertheless, its leaders have expressed the wish to remain in opposition.