Photo: Steve Hodgson on Flickr
If you’re not watching the headlines this Sunday, you’re going to be missing out on the biggest macro story right now: the first round of the French presidential elections.The elections will be completed in two rounds, and most expect that both front-runner François Hollande of the Socialist Party and the right-wing incumbent Nicolas Sarkozy will make it to the next round on May 6, these elections could still have a major impact on France’s stance on how to deal with the sovereign debt and banking crises threatening the viability of the euro system.
Here are five reasons why you should be watching the elections closely:
- Investors are wary that Hollande’s proposals could destroy the alliance between France and Germany that has driven through most of the eurozone reforms to date. Hollande has called for France to renegotiate the latest European Treaty, alter the mandate of the European Central Bank, initiate eurobonds, and create a French public investment bank.
- French voters from the two biggest parties—Sarkozy’s Union for a Popular Moment and Hollande’s Socialist Party—are notoriously bad for abstaining from the first round of elections. In 2002, 28 per cent of the population failed to show, and the Socialist front-runner and then Prime Minister didn’t even make it to the second round. This possibility is not likely to materialise, but it remains a risk.
- Portions of the vote won by third parties will dictate how power is split in the next administration, according to an investor note published by UBS chief economist Andreas Höfert.
- The results of this election will influence parliamentary elections that will take place on June 17.
- Approximately 10 per cent of voters come from the centre. According to Höfert, the level of success centrist candidate François Bayrou enjoys will “shape the debate between the two main contenders after the first round. It will be equally crucial to see, whether Mr. Bayrou will give any sup- port to the one or the other candidate between the two rounds.”
Höfert argues that although the outcome of the elections appears to be firm right now, the French saying “Impossible n’est pas Français” (“impossible” isn’t a word in French so everything is possible) epitomizes this race.
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