The recent victory of the far-right National Coalition in the upcoming elections in France is causing concern among investors about the future of economic reforms initiated by the Macron administration. Following the European Parliament elections, where the National Alliance won with 32 percent support, President Macron called for early parliamentary elections. Despite his Renaissance party receiving only about 15 percent support, this move has added to market uncertainty and caused a six percent drop in the CAC 40 index of the Paris stock exchange since Monday, with bank shares taking a particularly hard hit.
Investors are worried about the growing power of left-wing parties and far-right groups in parliament, which may result in increased public spending. This has raised concerns about the future of economic reforms that Macron has pushed for. The upcoming elections on June 30 and July 7 will be crucial in determining the direction of economic policy in France.
The uncertainty in the French market has had a ripple effect on other parts of Europe, with German, Italian, and Spanish stock markets also seeing declines. The euro has weakened against the US dollar, and risk premiums for French government bonds have risen. Economists are concerned about the potential consequences of this political crisis, including lowering France’s credit rating and even leaving the eurozone altogether.
Overall, investors are on edge as they wait to see how these upcoming elections will impact not only France’s economic stability but also that of Europe as a whole.
