Looming Dangers in France

If there’s one key conclusion we can take away from the political scene of 2016, it is that anything is possible and polls based on “common sense” are not always true reflections of real conditions, as both the Brexit vote and Trump’s election proved. We should keep this in mind when discussing the developments in France where presidential elections will be held in April this year. France, like the United States, is a presidential republic, i.e. the President is the main political figure. The country also boasts the sixth largest economy in the world, so its destiny has the potential to affect billions of people across the globe. But this is France we’re talking about – everything is normal and peaceful there, right? Well, not really. Far-right leader Marine le Pen has risen to prominence in the last months, making a strong claim for the presidential seat. The possibility of her being elected President is feared by most politicians and economists around the world, in the same way Trump and Brexit were presented as undesirable. The negative attitudes towards le Pen are based on her promised course of policy making. Le Pen has talked a lot about the dangers of immigration and would likely favor an immigration ban not that different from Trump’s controversial recent decision. She also supports the agenda of a “strong, independent” France, meaning an exit from the European Union and the eurozone. This is a scary scenario for many people, as France – together with Germany – has remained as one of the two major pillars supporting the European Union after the United Kingdom voted to leave. If Germany is left to handle Europe and the refugee crisis on its own, the future of the EU would be grim, to say the least. The already vulnerable euro has suffered further shocks in recent weeks due to le Pen’s increasing popularity – she is expected to be one of the two top candidates and might even win the elections. It has dropped to $1.05 and may sink lower in the coming days. The shock has spread toward French bonds and would likely take over the French stock market soon enough. Overall, investor interest is running away from France and its volatility, expected to last at least until the end of April.