Le Pen gets Le Spanked
As had been widely expected for a number of months now Emmanuel Macron, a centrist candidate who had only created his En Marche! party 13 months ago won the French election in a thumping victory over Marine Le Pen. Macron won by a margin of 2:1 gaining 66% of the vote against Le Pen’s 34% of votes cast. It is a heavy win; indeed the only person to have lost by a larger amount was Marine Le Pen’s father Jean-Marie in 2002.
The euro rally was brief and small with EUR/USD popping above 1.10 for the first time since the election and GBP/EUR in and around the 1.18 mark. Continued euro strength looks quite likely in our eyes. Fears over a wave of wins for populist parties have lessened given their defeats in both the Dutch and French elections and this weekend’s win for Angela Merkel in a German regional vote. Secondly, the data from the Eurozone this year has been steadily improving and there is a decent chance that European Central Bank now has a little more cover under which to operate should it feel the need to lessen the amount of stimulus that it is providing for the Eurozone economy.
Risks remain of course and as much as Macron’s win last night was emphatic, there is a non-negligible possibility that Macron’s reform agenda is hamstrung in the legislative elections by his lack of a party apparatus.
Macron a negative for the UK
Here in the UK we have to think that Macron’s win is a negative for the UK’s position within Brexit. Macron campaigned draped in the EU flag – something that is beyond the pale in UK politics – and will spend a lot of his political capital portraying France as an almost anti-Brexit state. He is unwilling to compromise on the European freedoms of trade and movement and will set out his stall to tempt British businesses into France to maintain single market access and free movement.