2017 French elections – They think it’s all over…it isn’t

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Emmanuel Macron, the centrist founder of the En Marche! movement beat National Front candidate Marine Le Pen by two votes to one in the second and final round of the French presidential elections on 7th May, in line with my core scenario.

But for President-elect Macron (and arguably the other main party leaders), the hard work starts now. Macron is expected to appoint next week his Prime Minister and there has been much speculation.

I would expect Macron to pick a head of government and approve cabinet ministers who will not polarise political opinion. The appointment of a “rainbow government” would likely help his party – recently renamed “La République En Marche” – secure the largest number of deputies at the forthcoming legislative elections on 11th and 18th June.

If his party succeeds as opinion polls suggest – no mean feat for a party which is only a year old and currently has no parliamentary deputies – this would in turn help reinforce Macron’s position and his choice of Prime Minister. 

However, polls suggest that La République En Marche may fail to secure a majority of the 577 seats in the National Assembly.

If the party falls well short of that number, it would likely seek a loose coalition with either the Republican Party or less likely with the beleaguered Socialist Party, in my view.

The National Front is likely to cement its position in French politics but it will need to reform itself and I would expect personnel changes and policy tweaks.

Marine Le Pen fell well short of securing the presidency and this should have come as no great surprise as nationalist parties in other EU member states have also come up short.

This is in line with my view that while nationalist/populist parties may have greater influence on the political landscape they will in most cases fail to exercise true power, let alone dismantle the eurozone and/or EU.

Finally, opinion polls which predicted with great accuracy the second and in particular first round of the presidential elections, are back in favour – at least in France.


Emmanuel Macron wins second round in landscape-changing presidential election

Emmanuel Macron, the founder of the centrist En Marche! movement, won the second and final round of the French presidential elections on 7th May with 66.1% of the popular vote, with National Front candidate Marine Le Pen garnering 33.9%, according to final official numbers published by the Conseil Constitutionnel (Constitutional Council) on 10th May. The outcome of the vote was in line with my core scenario (see 7 reasons why Macron will become President and market implications, 25 April 2017, The Ultimate Guide to the 2017 French Elections – Part IV, 13 April 2017 and Going Dutch 17 March 2017).

These presidential elections have challenged many long-held assumptions and significantly altered France’s political landscape which will likely be key in the forthcoming legislative elections as I discuss below. At 39 years old, Macron is France’s youngest ever President (see Figure 1) and the first centrist president since Valéry Giscard d’Estaing who won the 1974 elections as the Union for French Democracy’s candidate (see Figure 2).

Perhaps more significantly, Macron is the first ever presidential candidate to win an election without the backing of a major party, with Macron having launched only a year ago his En Marche! movement – which has in recent days been renamed La République En Marche (The Republic on the Move). While the National Front candidate Marine Le Pen fell well short in the second round of being elected president, it was by far the ever strongest performance by a National Front candidate (see Figure 12).


Olivier Desbarres its all over fig 1 and 2


But these elections also revealed the extent to which voters are divided across the political spectrum. Four candidates won 19% or more of the popular vote in the first round of voting on 23rd April (see Figure 3) and in the second round a record high 34% of registered voters failed to vote or returned blank/void ballot papers (see below and Figure 9).


Olivier Desbarres its all over fig 3

The quasi-duopoly which the Republican and Socialist parties have enjoyed for four decades has been laid bare. For the first time in a presidential election, neither the Republican or Socialist party candidate made it to the second round and for the first time ever the Socialist Party candidate was outside the top three, with Benoît Hamon coming in fifth with a meagre 6.4% of the popular vote.


Next up – Macron needs to appoint a Prime Minister and approve government ministers

Macron, President elect, will be officially inaugurated on 14th May to become France’s tenth president under the Fifth Republic and François Hollande will step down (see Figure 4).



President Macron, the head of state, will then appoint his prime minister, the head of government, and he can choose whomever he wants. While prime ministers are usually chosen from amongst the ranks of the National Assembly, on rare occasions the President has selected a non-officeholder because of their experience in bureaucracy, the Foreign Service or private sector (Dominique de Villepin, for example, served as Prime Minister from 2005 to 2007 without ever having held an elected office). The Prime Minister will then draw up a list of government ministers which Macron will have to approve (see Figure 5).


Olivier Desbarres its all over fig 5

Macron has said that he already knows whom he will appoint as appoint as Prime Minister and there has been much speculation about the possible candidates. They reportedly include, in alphabetical order:

  • François Bayrou, the centrist leader of the Modem who gave this support;
  • Xavier Bertrand, a Republican Party member and former minister;
  • Jean-Yves Le Drian, the current Minister of Defense;
  • Richard Ferrand, a Socialist Party deputy;
  • Sylvie Goulard, a member of the En Marche party and a former MEP;
  • Anne-Marie Idrac, the former Secretary of State under Presidents Chirac and Sarkozy;
  • Christine Lagarde, the current Managing Director of the International Monetary Fund (IMF)
  • Bruno Le Maire, a Republican Party deputy who has expressed a desire to join En Marche; and
  • Edouard Philippe, the Republican Havre deputy-mayor.


But Macron’s choice of Prime Minister is potentially constrained by the fact that under the French Constitution the National Assembly (the lower house of parliament) has the power to dismiss the Prime Minister and Council of Ministers. While the President has in turn the power to dissolve the National Assembly, this has only happened once and in practice the choice of Prime Minister must reflect the will of the majority in the Assembly.

Macron’s next big challenge therefore is for his fledging party to win a majority of the 577 seats in the National Assembly elections scheduled to take place over two rounds on 11th and 18th June (see Figure 6). Macron could of course hedge his bets to avoid the risk of the National Assembly dismissing his Prime Minister by appointing a Prime Minister which he thinks will enjoy majority support regardless of whether La République En Marche manages to secure a parliamentary party. This leads me to believe that Macron will opt to for a Prime Minister who does not polarise political opinion and is therefore not too far to the left or the right on the political spectrum.



Macron likely to seek a rainbow government and party

Macron’s La République En Marche party is only a year old and currently has no deputies in the National Assembly where a Socialist Party led coalition enjoys a slim majority (see Figure 7). Macron has said that this party would field 577 candidates taken from across the political spectrum, including independents and politicians from the mainstream Socialist and Republican parties, and from civil society.  La République En Marche will reportedly announce on 11th May the names of 450 of its 577 candidates (the deadline for all parties to officially announce their candidates is 19th May – see Figure 4).

A number of senior politicians from these parties, which have for decades enjoyed a near duopoly over French politics, have already publicly announced that they would join La République En Marche. These include former Prime Minister Valls who lost the second round of the Socialist Party primaries in January although La République En Marche officials have showed little enthusiasm for Valls’ defection. Conversely, Republican Party member Christian Estrosi said he had been offered a cabinet post but had declined and would instead run for mayor of Nice.



The scale of Macron’s project is unprecedented, with the previous six presidents hailing from either the Socialist or Republican parties (see Figure 2) which were all but guaranteed to be the largest or second largest party in the National Assembly. Even if La République En Marche successfully fields 577 candidates – in itself no mean feat – securing a majority of 289 seats is a tall order.


Very difficult to predict how many parliamentary seats parties will win

Opinion polls for the first and second round of the presidential elections proved very accurate (see below). However the modalities of the first and second round of the legislative elections (see Figure 6), likely political alliances and uncertainty about actual voter turnout ultimately make it very difficult to translate percentages of popular votes (whether actual or polled) into actual numbers of deputies. The British general elections, which are run on a first-past-the-post basis, are a point in hand. In the 2015 elections the ruling Conservative Party won a far larger share of the 650 House of Common seats than polls had suggested was likely (see Conservatives win landslide elections, 8 May 2015).

Recent polls suggest that abstentions and undecided voters for the legislative elections could be as high as 45%, which seems feasible given the low turnout in the arguably more voter-friendly presidential elections. While Macron obtained 66.1% of valid votes in the second round of the presidentials, voter turnout of 74.6% was the second lowest ever and well below the 81.6% average recorded between 1969 and 2012. Put differently one in four registered voters simply did not turn up to vote (see Figure 8). Moreover, the share of blank and void votes (8.6%) was the highest ever recorded and by a large margin (see Figure 9). As a result, over a third of the registered electorate (34% to be exact) did not vote or returned a blank/void vote – a clear indication of the level of voter disaffection with the second round finalists.



In effect, only 43.6% and 22.4%, respectively, of registered voters gave their support to Macron and Le Pen on 7th May (see Figure 10).



Opinion polls suggest La République En Marche may need to form broader coalition

The geographical breakdown of votes from the first round of the presidential elections and recent polls of voters’ intentions in the legislation elections suggest that La République En Marche may struggle to secure a parliamentary majority.

According to Ministry of Interior figures for the first round of the presidential elections, Macron came first in 240 circumscriptions, Le Pen in 216, Mélenchon in 67 and Fillon in 54. The polling agency L’Internaute estimates that this would translate into 427 En Marche candidates making it to the second round of voting, while the National Front, France Insoumise and Republican Party would respectively have 295, 237 and 227 candidates. It is unclear whether these numbers would translate into En Marche winning the largest number of seats, let alone a parliamentary majority. Recent polls conducted since the second round suggest that voters’ intentions have not changed materially since the first round vote (see Figure 11). But again converting these voting intentions into actual deputies is an exercise fraught with difficulty.


Olivier Desbarres its all over fig 11


Various polls and internal party estimates conclude that République En Marche could win 200-285 seats, the Republican Party 100-150, the National Front 20-70, the Socialist Party 20-60 and France Insoumise 6-23. But this does not take into account the possibility of candidates from two (or more) different parties forming an alliance in the second round.

If La République En Marche falls just short of a parliamentary majority, it will likely seek to form a broader coalition with the Republican Party or less likely with the beleaguered Socialist Party (in the same way that President Hollande’s Socialist Party, which has 284 seats, has formed loose alliances with other centre-left parties). But even if La République En Marche falls well short of 289 deputies, the National Assembly is likely to be very fractured along political lines and would likely struggle to cobble the required majority to dismiss Macron’s Prime Minister.


National Front likely to cement its position in French politics…if it can reform itself

The National Front currently only has two deputies in the National Assembly but opinion polls suggest it will significantly increase this number. It will not even come close to being the largest party, let alone secure a parliamentary majority, but if the National Front can successfully regain some momentum in coming weeks it will likely further cement its position as a major political force.

The failure of Marine Le Pen to come even close to being elected has seemingly kick-started an in-depth review of the National Front’s tactics and strategies ahead of the legislative elections. The party’s leadership has hinted at a full-scale rebranding, including re-naming the Party to emphasise its France-first credentials.

I would expect the party to once again distance itself from the more extreme views and policies favoured by its founder Jean-Marie Le Pen, with Marine Le Pen’s lurch to the right in the final weeks of campaigning having seemingly backfired. Moreover, I would expect Marine Le Pen tone down her long-held goal of taking France out of the eurozone and the EU. Already in the weeks before the second round she had toned down her anti-Europe rhetoric as it became obvious that French voters did not share their British counterparts’ penchant distance itself from the EU. It was ultimately too little too late and if anything Le Pen’s apparent u-turn and muddled policy of a hybrid French Franc and euro currency regime likely cost her votes in the second round.

This repositioning may well also result in further senior personnel changes. Marion Maréchal Le Pen, Marine’s niece and the only National Front deputy in the National Assembly, announced on 10th May that she was leaving the party and politics to likely start a career in business. Her more extreme stance on immigration but more pragmatic view of France’s membership of the eurozone and EU had put her at odds with Marine Le Pen. The loss of Marion Maréchal Le Pen – who had been touted as a likely future leader of the party and presidential candidate – has put in perspective the challenges facing the National Front.


Socialist Party in disarray…mimicking downfall of Socialist Parties across Europe

The Socialist Party is likely to be biggest loser in the June elections, with polls predicting that it will at best only be the third largest party after La République En Marche and the Republican Party. It could conceivably fall further down the pecking order behind the National Front and a far-left coalition led by Mélenchon’s France Insoumise party.

The Socialist Party has lost much ground under the unpopular presidency of François Hollande and former Socialist Prime Ministers Jean-Marc Ayrault (2012-2014), Manuel Valls (2014-2016) and Bernard Cazeneuve (2016-2017). The Socialist presidency and government have ultimately struggled to address economic issues (including still high unemployment rates and tepid growth) and domestic policy issues (including immigration and national security) and been criticised for playing second fiddle to Germany on European issues. The party’s downfall mimics the collapse of the British Labour Party led by Jeremy Corbyn, which is expected to lose many parliamentary seats in the 8th June elections, and of the Dutch Socialist Party which is now only the seventh largest party with 6% of deputies following parliamentary elections in March.


French presidential election post-mortem – Nationalism and opinion polls
Nationalist parties gaining ground…but not power

Marine Le Pen won a third of the vote – nearly twice the share of votes which her father and National Front leader Jean-Marie Le Pen won in the second round of the 2002 presidential elections (see Figure 12). Le Pen, who has long promoted a nationalist agenda with a domestic security and anti-immigration bias and in recent years campaigned in favour of France leaving the eurozone and European Union, has clearly tapped into French voters’ disaffection with mainstream politics and inclination for France-focussed policies. This is in line with the view I expressed in early 2016 that “the immigration issue is likely to further divide EU countries and fuel nationalism” (see What to expect in 2016 – same, same but worst, 19 January 2016).



However, Marine Le Pen fell well short of securing the presidency, as I argued would likely be the case (see EM currencies, Fed, French elections and UK reflation “lite”, 25 November 2016). Her 33.1% share of the vote was the second lowest ever percentage won by the runner-up in a French presidential election and below the 43% historical average (see Figure 13). This should have come as no great surprise as nationalist parties in other EU member states have also recently come up short.

  • In Austria, the candidate of the nationalist Austrian Freedom Party, Norbert Hofer, lost a re-run of the 4th December 2016 presidential elections, despite having won the first round and come very close in the (original and later cancelled) second round.
  • In the Netherlands, the nationalist Party for Freedom led by Geert Wielders came second in the 15th March parliamentary elections with 20 seats – a gain from 12 seats (and 15 seats after the 2012 elections). But this was well short of expectations based on polls showing 25% support (and about 37 seats) and left the party a long way from being able to lead a ruling coalition let alone a parliamentary majority (75 seats).

While there is little doubt that the political, economic and social status-quo is being tested and nationalism is on the ascendancy in Europe, nationalist and/or populist parties are still falling short and failing to cause widely-forecast major political upsets. Voters are still seemingly reluctant to elect nationalist parties and politicians to the highest political echelons. This is in line with my view that while nationalist/populist parties may have greater influence on the political landscape they will in most cases fail to exercise true power, let alone dismantle the eurozone and/or EU (see Nationalism, French presidential elections and the euro, 18 November 2016, and Black swans and white doves, 8 December 2016).


Opinion polls back in favour – in France at least

Macron’s convincing two-to-one margin of victory over Le Pen was in line with opinion polls which in the days before the second round had Macron on 62% and which had consistently showed support for Macron around 60% (see Figure 14). The gap between the actual outcome and the latest opinion polls – about +/- 4 percentage points – was only slightly higher than the typical +/-2% margin of error on such polls. This supports my long-held view that French opinion polls remain accurate predictors of presidential elections (see The Ultimate Guide to the 2017 French Elections – Part III, 5 April 2017).



Despite opinion polls having forecast with great accuracy the outcome of the first round of the French elections on 23rd April (see Figure 15) and the second round of previous presidential elections, there was much debate about whether they could be trusted. In the days, weeks and months before the French presidential elections numerous scenarios were put forward whereby Le Pen would beat Macron, albeit by a narrow margin. Most of the reports forecasting a shock win for the National Front leader were premised on opinion polls under-estimating the impact of a low voter turnout and the likelihood that undecided voters would gravitate towards Le Pen rather than Macron.



But this simply did not materialise. Voter turnout was low (see above) but this seemingly conveyed no advantage to Le Pen, pouring cold water on the idea that her supporters were somewhat more committed and more likely to vote than Macron’s supporters. Moreover, there is little evidence that undecided voters gravitated towards Le Pen or that voters who said they would support Macron actually voted for Le Pen on Election Day. In effect, those polled were an accurate reflection of how 31.4 million voted. If anything, it would seem that polls slightly underestimated undecided voters’ propensity to vote for Macron.


Olivier Desbarres

Olivier Desbarres currently works as an independent commentator on G10 and Emerging Markets. He has over 15 years’ experience with two of the world’s largest investment banks as an emerging markets economist, rates and currency strategist.

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