The euro slipped on Monday, July 8, following the Left’s unexpected victory in France’s snap general election, with the results pointing to a hung parliament.
While investors and the Eurozone prepared for a hard-right victory on Sunday night, the surprise result spread uncertainty over the country’s finances.
Following the win, leader of the hard-left party La France Insoumise (LFI) Jean-Luc Mélenchon vowed “to implement the left-wing program”, including on economics.
Such policies could increase the French deficit and risk the Eurozone’s stability, with LFI vowing to increase public spending despite calls for cuts from EU institutions.
The European Commission has already launched a punitive campaign against France over excessive spending, with the French socialists now wanting to spend an additional ‘€100 billion in 2025’.
This is not the first time that the financial market has shown worries, in June the French market plunged following Emmanuel Macron’s call for a snap election.
France’s left-wing alliance measures may cost ‘€100 billion in 2025’. https://t.co/mf8M0rdco4
— Brussels Signal (@brusselssignal) June 21, 2024
The spending plan of the left-wing alliance is not the only issue for French finances.
Macron’s election gamble ended up with a fragmented parliament that is set to weaken France’s role in the European Union and make it hard for anyone to push through a domestic agenda.
The left-wing alliance and its allies have 202 seats, Marine Le Pen’s National Rally came third with 143, while President Emmanuel Macron’s centrist alliance notched up 156.
A majority requires 289.
To avoid instability French President Emmanuel Macron could try and form a coalition or name a “technocratic administration”, but no one seems willing to work with him in the next parliament.
Olivier Faure, the head of the Socialist Party, indicated that the left-wing alliance will not form a coalition with Macron’s group.
The centre-right parties– Macron, some members of the French Republicans and several other smaller groups — aim to create a coalition without them and the left is on the edge of an internal quarrel.
There is also the question of who should serve as France’s next Prime Minister.
While Jean-Luc Melenchon is under accusation of antisemitism, for his allies like Mathilde Panot one of the leaders of the La France Insoumise, he is “absolutely not disqualified” for the Matignon.
“Jean-Luc Mélenchon is the man who taught the left how to win again, the man who gave hope to millions of people by winning 22 per cent in the presidential election, the man who made it possible for not just the Nupes to exist, but today’s New Popular Front,” she said.
For German European socialist Michael Roth, Chairman of the Foreign Affairs Committee of the German Bundestag, Melenchon is “first and foremost a nationalist, anti-Semitic populist, but not a democratic, emancipatory, pro-European leftist”.
Melenchon ist in erster Linie ein nationalistischer, antisemitischer Populist, aber kein demokratischer, emanzipatorischer, proeuropäischer Linker! Ich hoffe auf @rglucks1!
— Michael Roth – official 🇪🇺🇺🇦🇮🇱🇬🇪 (@MiRo_SPD) July 7, 2024
The French socialist Olivier Faure for his part, would like the Left to agree on the candidate to be sent to Matignon in the wake of the NFP’s victory in the legislative elections.
Nevertheless, the Left agrees that Emmanuel Macron should “respect the election results” and appoint a left-wing PM.
