Upcoming French Elections and Their Potential Impacts on Macron's Role
In a dramatic turn of events, France's snap legislative elections have resulted in a potentially prolonged period of great political uncertainty. The first round of voting saw a record 33% vote share for the National Rally (Rassemblement National, or RN), with the left-wing alliance, the New Popular Front, second at 28%, and President Emmanuel Macron's centrist coalition, Ensemble, third with 21%.
Following the victory of Marine Le Pen in the election polls, President Macron announced an immediate general election. The prospect of a lame duck president, and either a 28-year-old hard-right prime minister with gigantic spending plans, or a centrist technocrat with no real mandate or authority, has raised concerns about instability.
The backlash against Macron includes criticism of his arrogant, elitist manner, unpopular reforms, especially on pensions, and the timing of the election three years earlier than needed. However, from a business and investor perspective, Macron's presidency has seen a 'sustained effort to remake France as a modern, business-friendly economy.'
Bank stocks, such as Société Générale and Crédit Agricole, led the early trading surge in the CAC-40 index. The index rose 2.4% in early trading on Monday 1 July, its best daily performance for two years, following the first round of France's snap election polls. Bond prices began to rise again after the first round of elections, having fallen during the campaign.
However, France's current government deficit is more than 5% of GDP, and its credit rating has been downgraded twice in months. Total government debt in France has reached 112% of GDP, up from 66% two decades ago and among the highest of rich countries after Japan and the US.
Investors are betting that political gridlock would be a better option than an RN government, due to its fiscally reckless programme of protectionism, welfare spending, and unfunded tax cuts. Under the French electoral system, a candidate getting 50% wins outright. In the first round, the RN placed first in 296 seats, which could potentially give it a parliamentary majority if repeated in the second round.
The left-wing alliance failed to win an outright majority, leading to a hung parliament and potential political gridlock. A 'Republican front' effort was made to stop the RN, resulting in a straight fight between the RN and one other candidate. However, the left-wing coalition won the day, with the RN pushed into third place.
The new French government formed after the second round of parliamentary elections is led by Prime Minister Sébastien Lecornu from Renaissance (RE), appointed by President Emmanuel Macron; however, the exact composition of the Cabinet Lecornu is still pending and the detailed party representation within the government has not yet been finalized as of September 2025.
The spread of French government bonds over their German equivalents is close to multi-year highs, reflecting the fragility of investor sentiment. A 'fiscally incontinent' RN government could cause a repeat of the crisis that hit the UK in the autumn of 2022.
In the past five years, Macron's governments have reformed labour laws, created two million jobs, set up more than six million businesses, cut business taxes and wealth taxes, boosted education, started to reform the pension system, and achieved growth above the eurozone average with poverty rates below it. The future of these reforms and France's economic stability remains uncertain.
