France faces political uncertainty following a surprising victory by a left-wing coalition in Sunday’s legislative elections, without any party achieving a majority needed to govern. The New Popular Front, composed of Socialists and far-left France Unbowed, secured 178 seats in the National Assembly. Marine Le Pen’s National Rally, which was expected to win, came third with 143 seats, and President Emmanuel Macron’s centrist alliance obtained 156 seats.
Without a tradition of coalitions in France, forming a government capable of passing laws is challenging, as no group has the 289 seats required for an absolute majority in the 577-seat lower house. The unpredictability stirred financial markets, with the euro and French bond futures slipping.
According to the Institut Montaigne, campaign promises from the New Popular Front would need about €179 billion ($194 billion) annually, far surpassing Macron’s party’s extra spending of €21 billion. Le Pen’s National Rally planned an extra €71 billion in spending.
Le Pen remarked positively on the results, noting the National Rally’s significant seat increase from 89 to the most for any single party, indicating rising support despite falling short of a majority. Macron faces difficult decisions: forming a coalition or appointing a technocratic administration, both likely resulting in a weakened government.
Macron’s first prime minister, Edouard Philippe, warned of “formidable danger” due to the absence of a majority or government. While Jean-Luc Melenchon of the France Unbowed rejected a deal with Macron, Socialist leader Olivier Faure emphasized the need to address public demands.
Investors and analysts, such as Vincent Juvyns from JPMorgan Asset Management, predict market tensions and a demand for higher spreads until the new government clarifies its fiscal stance.
Macron’s strategy of withdrawing candidates to counter the National Rally via the Republican Front yielded mixed results, with National Rally President Jordan Bardella critiquing the approach as ineffective. The complexity of forming a new government and associated risks remain a concern for both France’s political credibility and market stability.
