Eran Peleg, CIO
French Presidential Election - Two Euro-Skeptic Candidates?
What Will Happen if Two Euro-Skeptic Candidates Make it to the Second Round?
The first round of the French presidential election is scheduled for Sunday. If you examine the recent involvement of opinion polls, you will notice a significant development: Melenchon, the far-left candidate, has strengthened considerably. See the rising red line in the chart below.
This development significantly alters the risk map associated with the upcoming elections. Previously, only three candidates had a real chance of making it to the second round (scheduled for May7th) – Le Pen, Macron and Fillon. Of these three, only Le Pen is Euro-sceptic. It was therefore expected that at least one pro-Euro candidate would make it, along with Le Pen, to the second round – where he, whether Macron or Fillon, would beat her to win the presidency.
However, the rise of Melenchon opens up a new risk scenario – two Euro-sceptic candidates, Le Pen and Melenchon, make it to the second round. Yes, Le Pen and Macron are leading the polls, however the gap between them and Fillon/Melenchon does not provide a sufficient margin of safety. If this risk scenario does materialize, we could be facing a reality, as soon as Sunday night, where it becomes clear that the next president of France will be a Euro-sceptic.
What would this mean for France's membership in the European Union (EU) and European Monetary Union (EMU, the Euro currency)? Given France's central role within these institutions, if it were to exit them, would they remain standing?
MANY BIG QUESTIONS…