In the upcoming French legislative elections, France will face threats to its EU membership from political extremes on both the left and right.
French President Emmanuel Macron’s call earlier this month early parliamentary elections plunged the EU’s second-largest economy into political instability. Depending on the results of these elections, uncertainty This could even extend to France’s membership of the European Union itself, according to a research note from financial services giant Macquarie.
Macron, a member of the moderate Renaissance Party, faces challenges from both the far right in Marine Le Pen’s National Rally party and the far left with a coalition of left-wing parties calling itself the Popular Front. Both groups’ economic programs have been accused of fiscal irresponsibility and could breach EU guidelines governing member states’ spending.
“Essentially, the far-left and right-wing populist agendas are sharply at odds with market principles and fiscal responsibility, would be a radical departure from current economic policy, and would undermine France’s relationship with the EU if implemented,” Macquarie global strategists wrote in a research note Monday.
EU looks the other way at France’s growing debt
The unbridled spending associated with these policies could lead France to adopt what the EU calls an excessive deficit plan. EU member states begin to implement these plans when the European Commission, the EU’s executive branch, finds that the country has violated the Stability and Growth Pact. The pact requires the 27 EU members to have a budget deficit of no more than 3% of GDP and a public debt-to-GDP ratio of 60% or lower.
However, the rules are not strictly followed. A lot of members EU are in violation some part of the pact. So much so that in February it was reformed to accommodate countries such as France, which have high levels government debt.
In any case, the plans proposed by the left and right will significantly increase government spending without a clear path to increasing government revenue. This could leave France stranded and unable to fill the growing hole in its national budget. France’s debt level in 2023 was 109% of GDP. according to in S&P Global, which predicts that this figure will rise steadily to 112% by 2027. projected this year will be 6.7%.
The far left who are “giving up on Europe”
The left has said it openly doesn’t want join the EU Stability and Growth Pact.
French Finance Minister Bruno Lair, who like Macron is a moderate, was clear in his condemnation on the left’s refusal to toe the EU line, saying it would lead to “economic collapse” This will almost certainly lead to “exit from the European Union” for France, says La Maire. said. “The Union of the Left is abandoning the pact and therefore abandoning European discipline, and therefore abandoning Europe,” he said.
This election cycle, the Popular Front has been unequivocal in its rejection of Macron, declaring that “full break» from the current president. The left has been critical of Macron during his reign, particularly over his controversial pension reform, which raised the retirement age from 62 to 64. Their economic plans include lowering the retirement age to 60, introducing a price freeze on essential goods such as fuel, food and energy, and raising the minimum wage, according to Macquarie’s analysis. The plans will be paid for through additional taxes on capital gains and the wealthy, according to an economic policy plan released by the Popular Front on Friday.
La Maire rejected virtually all of the spending increases in the Popular Front’s plan and their apparent refusal to adhere to EU guidelines on public spending. which he called “total nonsense.”
“What worries me is that left-wing political parties can still put forward an agenda that is also out of touch with the reality of the world,” he added.
La Maire accused the far left of not thinking through all the consequences that their policies would lead to. High levels of public debt caused by proposed leftist spending could isolate France from the EU and possibly force it to introduce austerity measures. If this happens, the economy will slow and businesses will lay off workers.
“Their program is complete madness,” Le Maire said. “This will guarantee a downgrade, mass unemployment and exit from the European Union.”
Far right, “woven of lies” and hardly better
Meanwhile, far-right politicians in France like those who are in another European countries have swam Eurosceptic positions. According to Macquarie, these calls from the French right will only become stronger if the EU signs a protocol on excessive budget deficits.
During the elections, Le Pen’s policy was accused of deliberately anti-European so that EU membership appears unattractive to voters. “She wants to stay on the EU bus, but drive it off a cliff,” Mujtaba Rahman, managing director for Europe at geopolitical consultancy Eurasia Group. wrote in the article for Politician.
Both of these realities drew strong condemnation from French Economy Minister Bruno La Maire. “There is a far-right bloc with its lies, especially in economic and financial matters, and there is a far-left bloc with its follies and economic nonsense,” La Maire said last week.
The right-wing National Rally has not officially released its economic program for the upcoming election cycle. However, the general thrust of his policy proposals is well known. Under Le Pen, the Rassemblement National has favored some populist economic policies, such as raising taxes on the rich and proposing to lower the retirement age again to 62.
“When I look at the far right, I see an agenda made up of lies, so it’s no better,” La Maire said in an interview with French television.
Like the left, the National Rally also wants to make essential goods such as food, petrol and electricity more affordable. However, the right has proposed eliminating the consumer value-added tax for these categories, rather than capping their prices. La Maire said it would reduce government revenue by 24 billion euros, which is “exactly equivalent” to the amount he planned to save to balance the budget. The moderate La Maire, however, was merciless in his harsh criticism of Le Pen and the National Rally, which, as with the left, he accused of advocating policies that would harm the French economy. “They don’t care about government money,” he said.
If the far right win Following parliamentary elections and the successful implementation of these plans, which will include a massive fiscal expansion, France’s debt burden will soar even higher than currently forecast, according to Goldman Sachs analysis. If the National Rally wins the upcoming elections, France’s debt-to-GDP ratio will rise to 120% by 2027, eight percentage points higher than otherwise predicted.
Despite some similar effects on the French economy, there are several notable differences between the policies of the two hardline factions. Unlike the Popular Front, many of the National Rally’s trade policies are much more protectionist in nature, designed to protect French workers from competition from international firms. Le Pen also found herself attract newfound attention from the French business class, predictably allergic to far-left politics, who turned to her after seeing the left’s tax policies.
For centrist Macronists such as La Maire, even this does little to calm what they see as two groups of extremists who, despite doing so in different ways, will plunge France into economic crisis.
“I simply say to our voters, center-right voters, center-left voters, that there is still the possibility of resistance, there is still the possibility of continuing to carry ambitions in France,” he urged in his address. to moderate.