The EU should be praying for a Le Pen victory in France
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Even in Brussels, they’ll be rooting for a Marine Le Pen victory in France’s snap parliamentary elections next month.
To state this apparently surprising truism is merely to recognise just how far France’s political landscape – and indeed that of Europe as a whole – has shifted since President Emmanuel Macron was elected for a second term two years ago.
Set against the alternatives, this one time “far-Right” populist suddenly seems like a political force the economic establishment can do business with. Her charismatic young lieutenant, Jordan Bardella, adds a dash of political stardust which makes the ascendancy of her party, Rassemblement National (RN), seem all but inevitable.
To be sure, European political and economic elites would much prefer some version of the centrist liberalism of Macron’s Renaissance party to the still largely unpredictable RN, but the president is now a hated figure in France, and his party is a spent force.
Renaissance is no longer the inviting, fresh-faced political phenomenon it once was, but instead is tarred with the same brush of failure as virtually all the other political incumbents of Western democracy.
Having already been crushed in European elections, Renaissance is widely expected to be further punished in the forthcoming national election.
Detoxifying the brand
For many, Le Pen remains a deeply divisive figure, a caricature of the proto-fascist, nativist roots from which she springs. Yet she’s made steady progress in detoxifying the brand, and what was once thought of in liberal circles as beyond the pale has in desperation come to be seen as an almost acceptable form of governance in waiting.
The other political grouping which is doing well in the polls is the alliance of the hard Left, Socialists and Greens centred on Jean-Luc Mélenchon, an outright communist who makes Jeremy Corbyn seem almost moderate in his views.
Mélenchon finds common cause with Le Pen as an outspoken critic of the European Union, which he sees as a fundamentally flawed and corrupt neo-liberal racket.
He rejects globalism, and to the degree that it is actually possible to further strengthen France’s already virtually unmatched worker rights and welfarism, Mélenchon is for it.
It is the prospect of these measures, against which Le Pen’s ambitions seem almost anodyne, which has been unsettling bond markets since Macron last week made his shock decision to call an election.
Macron’s supporters talk darkly of a Liz Truss moment, in which markets suddenly lose confidence in the already parlous state of France’s public finances.
Their purpose is to portray Macron as the voice of sanity and stability against the warring populism of France’s alt Right and hard Left, yet the comparison on matters fiscal is only a matter of magnitude.
Just days before Macron’s humiliation in the European elections, Standard & Poor’s downgraded France’s national debt, stating that on current policy there was very little chance of meeting the EU’s required deficit ceiling of 3pc by 2027.
France’s budget deficit last year was 5.5pc and its national debt an eye-popping 110pc of GDP. This is well in excess of even the UK, where the fiscal position is similarly regarded as critical, but at least has a relatively modest tax burden compared to France.
Since the French election was announced, so-called “spreads” – the premium charged for investing in one country’s debt over another’s – have widened alarmingly to their highest level since the eurozone debt crisis more than 10 years ago. It wouldn’t take much to tip things over the edge. France’s state of growing political dystopia may be the final straw.
Fiscal crises in Greece, Spain, Ireland and Portugal nearly succeeded in breaking the euro little more than 10 years ago, but these were just minnows compared to France. Financial meltdown in France would surely sink Europe’s experiment with monetary union for good.
Europe’s unlikely saviour?
But we are not there yet, and European elites sense a possible saviour in Le Pen – a supreme irony, given her evident hatred of them.
The imagined model is Italy’s Giorgia Meloni: elected as a Right-wing firebrand, she has thus far governed as a middle-of-the-road conservative not so different in some regards from Rishi Sunak’s Tory party.
One-time fiercely eurosceptic views have transmogrified into a pragmatically minded approach to Brussels which has largely bent to EU demands for economic reform.
In any case, Meloni’s hard-Right leanings, such as they are, have been substantially confined to immigration, culture wars and family values. Her economic realpolitik has meanwhile paid dividends in above-trend growth and, by Italian standards, an almost unprecedented degree of political stability.
In any case, Italy’s business establishment has fallen in love with her. At last they have a strong leader who broadly speaks their language, regardless of her anti-neoliberal rhetoric, which she still occasionally delivers in suitably demagogic form.
Business lobbies have been similarly flocking to Le Pen’s door. On paper at least, she looks almost as fiscally irresponsible as Mélenchon; like Mélenchon, she also wants to overturn many of Macron’s business-friendly reforms.
She would similarly bust the bank were she to implement the whole of her policy agenda in one go.
Yet in the choice between the devil and the deep blue sea, it’s wise to choose the devil you know and hope that, like Meloni, Le Pen’s bark is worse than her bite.
These are treacherous waters for business and finance. German business thought that by embracing Hitler it could tame him. Autocracy and totalitarianism are the natural bedfellows of the extremes of Left and Right.
Yet Le Pen is no Hitler. Provided she stays within democratic norms, her style of politics seems well-suited to France’s dirigiste system of government, and might be accommodated relatively easily by the French business and financial establishment.
“I’m respectful of institutions; I do not call for institutional chaos,” Le Pen told Le Figaro this week in apparent repudiation of her less than respectful past. “There will simply be cohabitation.”
Le Pen eyes French presidency
Does she mean it? Nobody knows, but perhaps the best guarantor of good behaviour is that Le Pen still has her eyes firmly set on the bigger prize of the French presidency, which is again up for grabs in three years’ time.
Assuming that RN wins a majority in parliamentary elections, she needs her party to govern well. Fiscal and political chaos in the meantime would surely doom her chances of success.
It may already be too late for La France. As others have observed, the country seems to be degenerating into a state of open civil war, even more so in some respects than the US, where the previously entitled, moderate centre ground is being similarly squeezed.
Given the political turmoil, it is perhaps surprising that credit rating agencies haven’t inflicted even deeper downgrades, and that investors are prepared to buy French debt at all on the still relatively small spreads that preside.
The greatest irony of all is that Le Pen, who once wanted to rip everything up and start afresh, seems to offer perhaps the best hope there is for political and economic stability.
