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Future Of France And European Union To Be Determined In Upcoming Presidential Elections

The entrance gate of the Elysée Palace (French Presidential Home) seen from the Rue du Faubourg Saint-Honoré

It seems every year brings a new threat to the survival of the European Union and in particular, the Eurozone. Last year it was the decision of voters in the United Kingdom to leave the former in a referendum, that has become known as the Brexit. In 2017, it will be the presidential elections in France, that will determine if the European Union and the common currency zone will endure intact.

Political pundits in France and elsewhere, will argue that recent polls indicate that only traditional candidates, have any real chance of winning the French presidency. Last year, these same experts were wrong on Brexit and the outcome of the American presidential election.

The accuracy of political polls are based on three factors, which include methodology, biases of the poll takers and the honesty of the participants. All three elements were skewed in the Brexit vote and in an election, that allowed Donald Trump to capture the presidency of the United States.

The political elite in Europe and the United States continue with the fallacy, that the majority share their views on a wide range of domestic and international issues. There has been a seismic shift in the electorate, on both sides of the Atlantic. To keep insisting otherwise, puts these more conventional politicians at grave risk.

A more recent phenomena is the rising segment of the citizenry, that will publicly state more longstanding views, which are directly in conflict with their private held opinions. When it is time to vote, the latter sentiments usually predominant. It is an unfortunate outcome for those select political leaders, who feel their perspectives should determine mainstream governmental policy.

France’s public debt, from 1978 to 2009.

France much like the rest of Europe, has experienced a difficult decade. The property bubble and real estate crash of 2007 and 2008, were contributing factors to the Financial Crisis and the Great Recession that followed. These events would coincide with the European sovereign debt crisis.

Although the European recession ended in 2012, the issue of excessive governmental debt lingers in many individual nations.

The European Union refugee crisis was the next situation, that totally overwhelmed the institutions in place, to deal with an inflow of migrants. Beginning in 2014, millions of individuals in the Middle East and North Africa, decided to leave their home nations and make their way towards Europe.

It has created a new schism in the European Union, between the countries that have accepted large numbers of the arrivals and those nations that refuse to do so.

France (dark green) on a map of the European Union (light green)

The result has been to call into question the open internal borders of the Union, that were brought into existence by the Schengen agreement. The pact in effect since 1995, allows the free movement of goods, services and people across most of Europe. Its membership has swelled to 26 individual countries.

In 2016, the European migrant crisis brought the temporary reintroduction of border controls in the nations of Austria, Denmark, France, Germany, Norway, Poland and Sweden.

The rising incidences of Islamic terrorism and the correlation that can be traced back to the open immigration policies of Europe, have returned to haunt many political leaders throughout Europe. Critical masses have been reached in a growing number of nations, that no longer support ongoing migration, on the scale that has taken place over the last few years.

President Hollande during a meeting in Carcassonne in May 2015

As a result of the increasing violence, French President Francois Hollande felt compelled to introduce a state of emergency in November of 2015. These were extended last July and now will continue in place, until after the 2017 presidential elections.

The French state of emergency remains controversial and symbolizes the failure of governmental policy. One casualty is Hollande himself. Already saddled with a dismal public approval rating, the recent turn of events, doomed his aspirations of a second term in office. He has become the most unpopular President in the Fifth Republic. In November of 2016, his support was down to a mere 4%.

Former president Nicolas Sarkozy and new president François Hollande, surrounded by Republican Guards, in the interior court during the ceremony of transmission of the mandate.

Accepting the implausibility of winning the next presidential election, Hollande withdrew from the race at the end of 2016. To have done otherwise, would of negated any chance that his socialist party has in the upcoming elections.

In the January primary, Benoit Hamon would win the nomination to represent the Socialist Party, in the presidential elections to be held in April and May of 2017.

The election prospects for the leading presidential candidates, have recently taken an unexpected turn. The former front runner Francois Fillon, has become embroiled in a scandal. The conservative party he represents, is putting increasing pressure on him to withdraw from the race.

Mr. Fillon has so far been reluctant to do so, since he won the 2016 primary with 66.5% of the conservative vote. He firmly derailed the plans of former President Sarkozy, to stage a political comeback in 2017.

François Fillon speaking in the National Assembly.

Recent polls now place the centrist Emmanuel Macron ahead of Fillon. As a former protege of Hollande, he has so far failed to inspire enthusiasm among French voters, to guarantee him victory.

Fillon is running on a platform of making major cuts in the public sector in France. The bloated and inefficient French bureaucracy, has become a major election issue. He has also pledged to reform the domestic economy and to upgrade the security forces of the country.

French economic competitiveness, has become the focus theme for many sectors of society.

Although many voters remain receptive to the conservative message, a majority of all French voters now want Mr. Fillon to drop his attempt to become president. The allegations that his wife was paid the equivalent of $830,000 USD (United States dollar) for a fictitious job as his parliamentary aide, undermine the legitimacy of his bid.

The wild card in French politics remains Marine Le Pen, who heads the further to the right populist and nationalist Front National party. She skillfully has taken the movement founded by her father and made the substance of her argument more acceptable, to the wider electorate.

Marine Le Pen in her presidential campaign, on 15 April 2012.

This has permitted the party to gain far greater appeal, to a much wider audience. Fortunately for Ms. Le Pen, recent events in France have aligned with the message, she has been touting for years.

Marine Le Pen and her party stand for economic protectionism, a strict regimen of law and order and above all else, opposition to mass immigration.

In the first presidential round, polls indicate Ms. Le Pen will gather at least a quarter of the total vote. In divided French politics, this entitles her to a lead that is at least 4% ahead of her next nearest rival.

To capture 25% of the electorate in a contest of five main candidates is significant.

The conventional wisdom is that Ms. Le Pen may well win the first round, but will fail miserably in the second round of the presidential contest. Polls have her losing to a more moderate candidate by 20% to 30%.

However, her positions of anti-establishment and anti-globalization, are playing quite well in some centrist and leftist precincts.

Such large electoral margins, will not be easily overcome. Much will depend on national events and the impact of unexpected decisions and information concerning individual candidates.

The Château de Chambord is one of the most popular tourist destinations in France.

In 2016, the French economy was battered by strikes in the energy and transport sectors. In the first half of the year, production of manufactured goods dropped markedly. Primarily due to the slump in refinery output, it brought the already slow growing economy to a pratical standstill. Growth for the entire year was a lackluster 0.4%.

The fear of further incidences of terrorism, threatens the annual $44.5 billion USD generated by the tourist sector. Before the recent rash of violence, France welcomed 85 million visitors yearly. This is more than any other country in the world. Increasingly, more tourists are heading to Portugal and Spain, to avoid becoming targets of terrorist activity.

At 57.5% of GDP (Gross Domestic Product), France has one of the highest public spending rates in Europe. High taxes have been needed, to cover these overly large expenditures. More recent tax hikes have focused primarily on high wage earners and large corporations, but the burden of taxation on the economy overall, remains quite heavy. 

The top personal income tax rate is a punishing 45% and the top corporate tax rate remains at 34.3%. There is also a value-added tax that further dents, the power of consumer spending. As of 2017, the overall tax burden has increased to 45% of GDP.

La Défense in Paris, is the largest business district in Europe.

The large government involvement in the economy has also hampered job creation. The slow pace of reforms in a rigid labor market, adds to the problem. This in turn, has led to a stubbornly high domestic unemployment rate of 9.9%.

Various stimulus measures enacted by the socialist government in the past few years, has resulted in a deteriorating financial situation inside the country. The budget deficit is 4% of GDP, and has often been above the rate of 3%, which was agreed upon by member states of the Eurozone. The debt to GDP ratio, has now surged to 95%.

These efforts has largely failed to bring a sustainable spurt in growth. The economy continues to stagnate, which partially explains the low approval ratings of the present government.

If the economy shows no sign of recovery and the security situation in the minds of the public continues to deteriorate,a dramatic turn in French politics may yet occur. If Le Pen does enter the presidential palace, the change inside France and the European Union will be quite dramatic. 

Marine Le Pen’s 2017 campaign logo

Ms. Len Pen considers the Brexit, the most important international event in Europe, since the fall of the Berlin Wall. If she wins the presidency, she has pledged to provide a referendum in France, on continued membership in the European Union. Le Pen would like the vote to take place within six months of her election. If it would succeed, that would necessitate a withdrawal from the Eurozone as well.

The movement that Ms. Le Pen represents, wishes for a return of the France that existed in the past. As in any other major change of this magnitude, there will be individual winners and losers, if the full sovereignty of France is restored.

There will be an economic cost to be sure, but it is important to keep in mind that for many voters, the long term survival of their country may be at stake. A slighter lower standard of living, may well be worth the cost under those circumstances.

A European Union without the United Kingdom and France, will become increasingly unstable. There will most likely be additional referendums in the nations of Italy, the Netherlands, Sweden, Belgium, Poland, Spain, Hungary and even in Germany.

Italy alone at this juncture, has demonstrated that there is enough national support, for a successful departure from the larger Union. Of course events will remain fluid, as will the nationalist and populist movements, that continue to gather strength across the continent.

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