(Bloomberg Opinion) -- The upcoming French and UK elections offer peculiar similarities. Emmanuel Macron’s snap vote already looked like a gamble worthy of Brexit — polls now suggest both he and Conservative Rishi Sunak face humiliation, trailing rivals to the right and left. The difference is that whereas the failure typified by the chaos of the Liz Truss era is in the UK’s rear-view mirror, something like it has yet to hit France.
A look at the policies on offer from the National Rally-led right-wing bloc and the New Popular Front on the left — respectively polling first and second — suggest that moderate elements, like repelling magnetic forces, are being pushed out. Both sides have unrealistic spending wish lists, including a reversal of Macron’s unpopular hike to the retirement age at a time when France is facing a demographic and debt squeeze. Both are also itching for a showdown with euro-area partners at a time when Europe’s geopolitical clout is threatened by Sino-American rivalry. After a recent selloff in French bonds and the Paris stock market’s loss of its European crown, there may be worse to come.
On the left, the surprise endorsement of former Socialist President Francois Hollande can’t hide the influence of far-left firebrand Jean-Luc Melenchon, who has dismissed antisemitism as a “residual” problem in France and who hasn’t ruled himself out as prime minister if his bloc comes top. Several planks of his 2022 presidential platform, whose cost was estimated at over €200 billion ($213.9 billion) by the think tank Institut Montaigne, have made it into the new alliance’s: A return to retirement at 60 from 64, price controls and a hike to civil servants’ pay that on its own would cost €20 billion a year. Even with a flurry of taxes to fund it, the New Popular Front promises open battle with Brussels’ deficit rules and panicky business leaders, who can barely believe that Macron’s pro-foreign-investment “Choose France” summit was only a month ago.
Meanwhile, on the right, the alliance between Eric Ciotti of the center-right Republicains and Marine Le Pen’s National Rally creates huge ambiguity over what Le Pen-omics would really involve. Ciotti once supported retirement at 65; Le Pen’s 2022 program, which is still on her party’s website, proposed going back to 60 at an estimated annual cost of €26.5 billion. Le Pen’s 28-year-old No. 2, Jordan Bardella, has recently gone to great lengths to walk some of this back, saying recently he would be “reasonable,” given France’s deficit — and, ominously, that the foreign-born have nothing to fear provided they work hard and respect the law. But the incredible vacuity of Le Pen’s program should give pause: This is a party that claims to be ready to govern, yet only recently promised everything from frexit and a “dual border” for France and the EU to a tax holiday for the under-30s. Its recent promise of a cut in value-added tax would cost an estimated €24 billion off the bat; Le Pen’s ideas on taxation amount to targeting those “not rooted” in France.
Nowhere is there mention of deep-seated problems like declining productivity, a lack of home-grown tech champions to rival Alphabet Inc. or Nvidia Corp., or lousy demographics — all of which the UK is still grappling with after Brexit along with record net migration. It’s one thing to acknowledge the new global hunger for protectionism, but quite another to claim that France should double down on its gold-medal levels of public spending and pay-as-you-go pension system. Bloomberg Economics estimates that in the expected scenario of a far-right relative majority in parliament, there would be a spike in implied borrowing costs — albeit short-lived — and a material increase in downside risks to growth. The word populism may be overused, but as US Supreme Court Justice Potter Stewart once said of pornography: “I know it when I see it.”
Rather like fact-checking, budget-checking looks like a futile exercise in an election driven by emotional appeals to history — you’re more likely to hear references to 1936 or 1940 in political debates than to “Le Spread” — and where no party appears headed for an absolute majority. “Neither side will be able to implement their policies,” Jean Pisani-Ferry, an economist who worked with Macron on his presidential campaigns, told newspaper La Tribune. “We are sending the signal of a country in disarray.”
A more optimistic reading is that there have been divided French governments in the past, and markets can moderate even the most rebellious political forces — just look at Italy’s Giorgia Meloni. This might all be part of Macron’s calculation — to stay above the chaotic fray of the next few years and duck the hard job of finding budget cuts under the pressure of Brussels’ deficit-monitoring technocrats.
But the reality is that razor-edge polls and tenuous alliances of political convenience point to a fragmented electorate, volatile politics and uncertain economics. France’s future looks like Macron in the Elysee, Le Pen dominating parliament and Melenchon holding sway on the streets — a triple co-habitation. Caution is advised.
More From Bloomberg Opinion:
- France Is Getting Weaker, and Markets Know It: Lionel Laurent
- Europe's Populists Are Blind to the Real Threat: Max Hastings
- The French Connection May Not Withstand This: John Authers
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Lionel Laurent is a Bloomberg Opinion columnist writing about the future of money and the future of Europe. Previously, he was a reporter for Reuters and Forbes.
More stories like this are available on bloomberg.com/opinion
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