Update on the French Presidential Election

Update on the French Presidential Election

Deuxième round – a Macron victory? The thoughts of Gilt Edge.

 

Is it presumptuous to predict an overwhelming victory for Emmanuel Macron on Sunday? Possibly, take Brexit or the election of President Trump. We would point out that, in fact, the Netherlands vote went the way of the polls and due to the system, the French electorate chooses its next President, it seems Mr Macron has too much support for Marie Le-Pen to overturn.

 

What would a Macron victory mean for markets?

 

In one word, stability. His appointment would provide the EU with much less political uncertainty. It is also felt that his victory would reinforce confidence in the economic outlook.

 

It has been well documented that the former investment banker and economy minister is proposing reforms, quite radical by French standards. The issue – a French economy that, although is growing, has done so at a much slower rate than Germany, the UK and the US. He has intimated that he will push for a eurozone budget managed by a eurozone finance minister. These proposals would be opposed by Germany, but if he reforms France’s economy and reduces the deficit below 3% then many may see his proposals as a ‘good thing’.

 

A victory for Emmanuel Macron, should create a positive reaction for markets. However, his victory has already been priced in since March when the Dutch rejected their right-winged candidate. His victory will still spark a confidence in global markets and the continuation of a resurgence in the EU.

 

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