Until last week, markets were sanguine about the French presidential election. The far right's Marine Le Pen was considered unlikely to prevail against the centrist Emmanuel Macron in the second round.
But now investors have been confronted with a new and alarming possibility: a run-off in early May between the far left and the far right. The former Trotskyist Jean-Luc Mlenchon has risen rapidly in the polls and with only a few points separating the top four candidates, there could be a second round between him and Le Pen.
"Success for either candidate would immediately lead to another EU crisis," says Buttonwood on Economist.com. Mlenchon wants to renegotiate EU treaties, while Le Pen has talked of reviving the French franc. Nor are his domestic policies any more appealing than Le Pen's. He sees himself as France's Hugo Chvez, and advocates old-style socialist policies such as a 32-hour working week, a salary cap and a retirement age of 60.
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The prospect of a run-off between the two extremes explains why the spread between French and German ten-year bond yields has hit its highest level since 2011.
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Millions at risk of 'unnecessary' tax bill – how to shield your savingsMillions of Brits could be taxed on their savings interest this year as their savings interest exceeds the personal savings allowance. Are you at risk?
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Savers will have to wait as long as 48 years to build a £1m cash ISA pot if allowance is cutChancellor Rachel Reeves is rumoured to be planning a cut to the cash ISA allowance in the Autumn Budget, making it harder for savers to build wealth. Will you still be able to build a £1 million cash ISA pot?
