Nationalism, French presidential elections and the euro
The shock results of US presidential elections and UK referendum are shining the spotlight on the rise of nationalist and populist policies.
The rejection of the political, economic and social status-quo has lead to increasingly vocal predictions that populist and/or nationalist parties will cause major upsets at forthcoming elections in EU member states, including Italy and Austria.
But forecasts that a broad-sweep of nationalist parties will rise to the highest political echelons in EU countries may still be far-fetched.
In most cases these parties still command only modest popular support which can be overstated in polls and difficult to translate into actual political power.
France is such an example. Support for Marine Le Pen, leader and presidential candidate of the far-right Front National (FN) party, has risen in recent years and she will likely make it to the second round of presidential elections in April-May 2017.
But she is unlikely to become President, with opinion polls showing she would lose the head-to-head vote, almost irrespective of the candidate she faces.
Moreover, the FN is likely to remain a minority party following next June’s elections for the French Assembly.
France’s presidential and parliamentary elections will in any case have far more modest repercussions for the global economy and asset markets than the election of Donald Trump in the US.
Even in the very unlikely event of Marine Le Pen becoming president, the impact on the euro could be modest and short-lived as France’s economy accounts for only 21% of the eurozone’s economy.
ECB policy and German elections due in September 2017 are likely to exert greater influence on the euro’s path.
It is also noteworthy that the euro has been one of the most stable major currencies in the past six-and-a-half years, despite the Greek crisis and the shock UK referendum result.
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