Investors panic over French election

published 21 April 2017

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.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

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.

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.