French President Emmanuel Macron has called a surprise parliamentary election in France, following his coalition’s disappointing performance in the European parliamentary elections.
According to initial indications, the Rassemblement National, RN (the new name of the National Front) obtained the largest share of votes and seats in the European Parliament. This is in line with the general shift in Europe towards right-wing nationalist populist parties. It is important to note that RN secured a vote share approximately double that obtained by the governing Besoin d’Europe coalition.
The RN is known for its anti-immigration, nationalist and Eurosceptic stance and in recent years has called for greater protectionism and opposed structural reforms, including rising fuel taxes. She also spoke out against the ruling coalition’s decision to increase the retirement age from 62 to 64.
As a result, success in the French parliamentary elections could lead to increased borrowing, thanks to tax cuts and subsidies offered to younger voters. Indeed, markets initially reacted to the news of the snap election by pushing up the yield on the 10-year OAT, the French government bond, by 12 basis points.
This is six basis points higher than the rise recorded by German Bunds, suggesting that a premium is already being established to reflect political risk. We will know more very soon, when the promises are announced before the elections.
Besoin d’Europe is made up of Renaissance (formerly La République En Marche!) Modem, Horizons, Parti Radical, Union des démocrates et indépendants. The coalition formed a minority government after the 2022 general election but has struggled to navigate a fragmented parliament. Last year, a crisis erupted during the difficult passage of the Immigration and Asylum Bill, which saw Élisabeth Borne replaced by Gabriel Attal as prime minister.
In the absence of recent polls on voting intentions, many are using the results of the European Parliament elections as a sign that France may be ready for a right-wing nationalist government.
If RN manages not only to win, but also to form a majority government coalition, then we can expect cohabitation with Macron who will remain president. This means that he will retain some control (via veto) over some national security issues, but ultimately the domestic agenda will shift to and be driven by Jordan Bardella, president of RN.
And the European parliamentary elections?
Provisional results show that the big winners in the 2024 elections were right-wing nationalist populist parties. The big winner was the far-right nationalist group Identity and Democracy (ID), which is expected to increase its number of seats held by 18%. The European Conservatives and Reformists (ECR), both right-wing, have also seen significant growth alongside the largest party, the European People’s Party (EPP).
The Left and the Progressive Alliance of Socialists and Democrats (S&D) – left and centre-left respectively – recorded a small loss in terms of seats. The biggest defeat, however, was for the Green and Liberal (Renew) parties, who both lost around a quarter of their seats
Overall, the results should mean that the previous coalition led by the EPP and supported by S&D and Renew will remain in control, having won 56% of seats compared to 59% previously. However, the shift towards right-wing populist and nationalist governments will have an impact.
There is a very clear desire to see greater controls and restrictions on immigration and there is real dissatisfaction with the perceived impact of green initiatives and the cost of such policies.
The idea that Europe can move forward and decarbonise its economy without taking into account the impact on the competitiveness of its businesses has damaged the energy transition agenda. The EU’s Carbon Border Adjustment Mechanism (CBAM), a system of tariffs on imported raw materials that fail to meet carbon emission limits and costs, is likely to gain further support.
The increase in Euroscepticism could also lead to a slowdown in the progress of candidate countries towards joining the European Union. The most important is currently Ukraine, which began accession negotiations at the end of last year.
EU membership can take many years and there is no guarantee of success (see Turkey as an example). However, a public stall or halt in Ukraine’s accession process could be seen as a political victory for Russia.
Despite this, we do not believe that the election results will have an impact on Europe’s military support for Ukraine. Many Eurosceptic parties, especially those in the Eastern European bloc, fear the possibility of further expansion of Russian forces westward and would not like to see aid to Ukraine cut.
