Macron Asserts Presidency Stability Amid Legislative Election Uncertainty


French President Emmanuel Macron has stated that the outcome of the upcoming legislative elections will not affect his position, despite market concerns sparked by rumors of his potential resignation, leading to a sharp selloff in French government bonds.

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In an interview with Figaro Magazine, Macron, 46, addressed what he would do if Marine Le Pen’s far-right National Rally wins the two-round vote concluding on July 7 and demands his resignation. “It is not the National Rally that writes the constitution, nor the spirit of it,” Macron said. “The institutions are clear, and so is the place of the president, whatever the result. It’s inviolable for me.”

Investor anxiety has been heightened by Macron’s surprise decision to dissolve parliament following his party’s severe defeat in the recent European Parliament elections. Adding to the uncertainty, Eric Ciotti, leader of the center-right Republicains, suggested his party should ally with Le Pen’s National Rally. However, other senior party members quickly dismissed Ciotti’s proposal, indicating potential division within the Republicains.

The national vote poses a significant risk for France’s European partners, with the possibility of Le Pen’s party gaining control of the legislature, potentially disrupting Macron’s strategies on the Ukraine conflict and altering Europe’s relations with China and the US, especially if Donald Trump returns to the White House.

Macron postponed a scheduled press conference to outline his campaign agenda from Tuesday to Wednesday. Meanwhile, the yield on 10-year French bonds (OATs) surged by up to 10 basis points, widening the spread over German bonds to levels unseen since the onset of the Covid-19 pandemic in March 2020. Italian bonds were also affected, with their spread over bunds increasing to 150 basis points.

Although an outright victory for Le Pen remains unlikely, even a divided parliament could severely limit Macron’s ability to implement his economic reforms. A recent poll showed the National Rally at 34% for the first-round voting intentions, with Macron’s group at 19%.

If Macron loses control of parliament, addressing France’s budget deficit will become more challenging. Last month, S&P Global Ratings downgraded France’s credit score, citing a persistent deficit above 3% of GDP through 2027. France’s fiscal watchdog also criticized the government’s deficit strategy as lacking coherence and credibility.

Chris Turner, ING’s global head of markets, noted the concern that any National Rally government might adopt a Trump-like approach to fiscal consolidation, attempting to grow out of financial problems. The European Commission is expected to focus on France’s fiscal stability during the finance ministers’ meeting on June 19, potentially launching an Excessive Deficit Procedure against France.

Macron, a pro-European advocate since 2017, may see criticism from Brussels bolster Le Pen’s campaign. The 55-year-old nationalist has been a long-time skeptic of the EU, previously advocating for France to leave the bloc to gain more policy freedom.

As the legislative campaign begins, Macron will attend the Group of Seven summit in Italy, while his political future and France’s stability will remain key topics both domestically and internationally. The recent volatility in French bonds, usually among the most stable in Europe, reflects changing risk perceptions, according to Societe Generale SA strategist Adam Kurpiel.

The CAC 40, France’s equity benchmark, dropped 1.2%, reaching its lowest level in nearly four months. Banks such as Credit Agricole SA and Societe Generale SA experienced significant declines. The index has fallen 2.6% this week, marking its largest two-day drop in nearly a year.

By Naija247news
By Naija247news
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

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