24 APR


Asset Allocation , French Elections , Macro , Topics

Emmanuel Macron / Marine Le Pen: the polls were right!

European equity investors have welcomed the positive outcome of the first French presidential election round. The more disruptive of the scenarios have been avoided, with pro-European candidate Macron in the lead to become France’s next president.

Quick comment on the results:

Although polls were tight, the two candidates who qualified for the second round were the two who led in the polls. The polls were not only accurate but rather precise. Emmanuel Macron won 23.8% of the votes, followed by Marine Le Pen (21.5%), François Fillon (19.9%) and Jean-Luc Mélenchon (19.6%). The turnout (78.7%) was higher than that for 2012.

These results suggest that there has been a reshuffle in the French political landscape. French politics have traditionally been dominated by two parties: the Socialist party (on the left) and Les Républicains (on the centre-right). This model has been shattered: none of the two main historical parties, which have held power since the founding of the Fifth Republic in 1958, has qualified for the second round. This outcome is a fresh illustration of a growing global trend: the divide between anti- and pro- globalization is now superimposing itself on the divide between the left and the right.

What are the platforms of the candidates?

The two candidates have very different platforms, with Marine Le Pen having an anti-Europe populist far-right platform, while Emmanuel Macron is more “pro-business” and clearly pro-Europe.

Marine Le Pen’s programme envisages reinstating national borders, increasing taxation on foreign workers, putting a stop to the provision of free health care and schooling to unauthorized immigrants,… It defends and promotes “French economic patriotism” and, more generally, is anti-globalization. The Front National platform also includes some populist measures similar to those proposed by Mélenchon (notably, lowering the retirement age to 60). It envisages two referenda: the first to change the Constitution (notably by introducing a “fully” proportional system for the Lower house elections, with a 30% bonus for the leading list, and by removing Title XV, which states that “The Republic shall participate in the European Union”); the second, coming six months later, to exit the EU (and hence the euro).

Emmanuel Macron is a social liberal, leader of the En Marche (“On the Move”!) movement and the most pro-European candidate. He has a rather balanced platform. He advocates cutting corporate taxes and social contributions to reduce labour costs. He has a €50 billion, one-off, 5-year public investment spending programme and specific measures designed to increase households’ purchasing power. He also wants to introduce a Nordic-type “flex-security” model and promises to respect France’s European commitment to rebalance the government’s fiscal position.


Who is leading in the second-round polls?

Marine Le Pen looks very unlikely to clinch the presidency. Indeed, polls conducted right after, as well as before, the first round show Emmanuel Macron winning by a comfortable margin (60% for Macron versus 40% for Marine Le Pen). Of course, we always have to be cautious as this is an unusual election. Voting recommendations by most politicians are still pending, but many prominent members of Les Républicains as well as the Socialist party have already said they are in favour of a Macron vote.


Whatever the results of the second round, the upcoming parliamentary elections in June will be key

Remember that France has a semi-presidential system: while the role of the President is much greater than in many other countries (the president is Commander-in-Chief of the Armed Forces and in charge of foreign policy), the Prime Minister and parliament oversee much of the nation's day-to-day affairs.

In the past, the Lower house elections that followed a Presidential election have usually tended to give the elected president a majority. This time, however, could be different!

The parliamentary elections are not proportional. They are based on a two-round system:

  • if a single candidate obtains over 50% of the vote, as well as a minimum of 25% of all registered voters, that candidate is elected;
  • if no candidate meets these criteria, a second round is held between the two leading candidates from the first round. Additionally, any other candidate who obtained above 12.5% of registered voters is allowed to participate.

In the past, when a Le Pen candidate qualified for the second round, the Socialists and Les Républicains agreed to withdraw one candidate to ensure the defeat of the Front National.

The shattering of the French political landscape has rendered those second-round alliances much less likely, however: it could very well happen that, in many constituencies, three or even four candidates run in the second round. The positioning of Macron, of course, has contributed to this reshuffling: the Socialist party is very weak and divided and some of its members have joined or shown sympathy for En Marche; the same holds true for some Les Républicains members, although to a smaller extent.

This reshuffling of the French political landscape, but also the rise in extremist parties (Mélenchon and Le Pen) compared with the 2012 presidential election, make it very difficult to have a view today on the future composition of the Lower house, all the more so since no polls are available.

  • Le Pen might get more elected MPs than in the past, but we think her ability to gain a majority is close to nil.
  • With Macron winning the Presidency, three scenarios could unfold:
    • Many centre-left and centre-right former MPs or strong local candidates decide to now run under the En Marche label (this has to take place before May 18th) and Emmanuel Macron has a majority in the Lower house.
    • The second possibility is a divided parliament. Remember: many En Marche candidates could be newcomers, half of them people from civil society, and voters might be less keen to vote for them. In this case, no single political party (or coalition) will have an absolute majority of seats in Parliament and so a “minority” government will be formed, which will have to find compromises (and would be constantly threatened by a no-confidence vote).
    • A cohabitation, that is, a party or coalition other than, or excluding, En Marche has a majority. The President then has to name a Prime Minister from this party or coalition (likely around Les Républicains).

Emmanuel Macron is at risk of having to deal with a divided parliament. In that case, we think he will adopt a “conciliatory” approach, trying to get members from different parties into the government. Such a mixed government could prove favourable to the implementation of reforms (Germany, in this regard, is a case in point), but this new approach to governing has never really been fully tested in France …!


  • The polls got it right!
  • The results do mark a reshuffling of the French political landscape.
  • We think Emmanuel Macron is bound to win the second round.
  • Whether Emmanuel Macron will be able to form a majority in parliament remains to be seen: the outcome of the parliamentary elections will be key. Some preliminary indications will be available by May 18th, when the names and political affiliations of the candidates will be known.

In any case, the outcome of this presidential election first round is clearly “market-friendly” as Emmanuel Macron is pro-EU, and more disruptive scenarios have been avoided.