French finance minister Bruno Le Maire warned on Friday that the eurozone’s second-biggest economy faced the risk of a financial crisis if either the far Right or Left won the coming parliamentary election because of their heavy spending plans.
Political uncertainty has already triggered a brutal sell-off of French bonds and stocks after President Emmanuel Macron unexpectedly called the election, following a trouncing of his ruling centrist party by Marine Le Pen’s eurosceptic National Rally (RN) in European Parliament elections last Sunday.
Asked whether the current political instability could lead to a financial crisis, Le Maire said: “Yes. I’m sorry, they [the far Right and Left] do not have the means to afford these expenses,” the finance minster, who had been planning multibillion savings to put France’s finances back on track, told Franceinfo radio.
A first series of opinion polls have projected that the RN, which has promised to cut electricity prices and VAT on gas and increase public spending, could win the election and be in a position to run the government. At least two polls have put the Left not far behind the RN, and ahead of Macron’s centrist camp.
Those polls were carried out before left-wing parties agreed a deal to run on a joint platform to try to counter the far Right and Macron’s camp with pledges to link salaries to inflation and introduce a wealth tax.
The RN calls for protectionist “France first” economic policies. It is expected to announce details of its economic programme in the coming days and has so far given only broad-brush comments on increasing household purchasing power and cutting energy prices.
Judging by proposals from the last parliamentary election in 2022, which it has said it will largely stick to, it would cut VAT on energy to 5.5% from 20% now and increase public spending, despite already significant levels of public debt.
Visiting a farm in Chuelles, south of Paris, RN leader Jordan Bardella said his party’s plans would be financed partly by closing tax loopholes. Action on cost-of-living issues would be one of his priorities, he said, alongside cutting immigration and being tough on crime.
“France is on a slippery slope, it is at risk of bankruptcy,” he said, urging the French to “dare to choose change”.
Worries about stability have triggered the biggest weekly jump since 2011 in the premium investors demand to hold French government debt, and bank stocks tumbled this week.
Senior bosses at leading French technology firms have warned that curbs to immigration proposed by RN pose a threat to the country’s ambition to become Europe’s leading AI hub.
Meanwhile, left-wing parties set aside differences to strike a deal late on Thursday that includes scrapping Macron’s unpopular pension reform.
"[He] won’t have a majority,” Greens leader Marine Tondelier said. “It’s either the far Right or us.” The Greens are in a newly formed alliance with the socialist and communist parties and hard-Left Unbowed France.
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