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5 Things You Need to Know About the French Election
The French presidential election is being viewed as post-Brexit Europe’s most important political development, and for good measure. The integrity of the European Union itself hinges upon the outcome and investors are wary of possible ramifications. As we head into the second round of voting this Sunday, here are 5 things you need to know about the French election. 1.
Most important election in France (and Europe) for decades
The two candidates have diametrically opposed views on the future of France, and by extension that of Europe. Centrist Emmanuel Macron will strive for an open economy and closer European cooperation. On the right, Marine Le Pen wants closed borders and out of the euro, and has also promised to hold a referendum on France’s membership in the EU - all actions that put the stability of financial markets at risk. 2.
Macron “Won” the Debate
When the two candidates battled it out in a televised debate on Wednesday, Le Pen had the chance to defend her anti-euro proposal and expose the current state of the EU. Macron didn’t quite let this happen and countered with arguments of his own – arguments that have seemed to sway a larger number of people. Analysts and opinion polls were largely in Macron’s favor post-debate, giving him a clear edge going into round 2. 3.
The polls are in Macron’s favor
Investors who are wishing for stability can breathe a sigh of relief. According to the latest Elabe poll, Macron is poised to get 62% of the votes, an increase of three points since the last poll. This is the best showing for Macron since the first round, and going forward he’s likely to gather the votes of the dropped candidates. Le Pen is expected to inherit some of the conservative vote from Francois Fillon, but this won’t be enough. 4.
The Market is Positive
The market has responded positively with France’s benchmark stock index jumping 1% on Thursday to its highest in years. The euro has also been reinforced with a 0.4% rise against the dollar. The yield difference between French and German government bonds has also decreased to its narrowest point in six months. Positions held by currency traders suggest that most are expecting Macron to win and keep things together. 5.
It’s Not Over When It’s Over
Even in the case of Macron’s predicted victory, the future of the euro can remain a topic of contention. If election results end up being close, Le Pen may carry on to be an influential figure in French politics - a voice for an unsatisfied electorate that is likely to continue airing their grievances. This French segment’s unfulfilled desire to ditch the single currency can continue to be a thorn in the side of a union that’s trying to weather the storm of political uncertainty, and this could make markets nervous about the future of the euro. Keep up to date on
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