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Is France headed for political stalemate and how bad is this for the euro?

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France News

Politics,EURUSD,ECB

France in political turmoil President Macron’s decision to call a snap legislative vote hot on the heels of the European elections came as a complete shock not only in France but also across Europe, not to mention for financial markets.

Far-right National Rally party maintains lead ahead of June 30 first round of votes But can it secure an absolute majority as left-wing alliance makes progress? A hung parliament might be the worst outcome for the euro What is widely perceived as an attempt by Macron to reassert his authority in the French parliament after his party lost its majority at the previous election in 2022, the move appears to have backfired.

Its policies include increasing public sector pay by 10%, lowering the retirement age to 62 and boosting healthcare and education. Although it plans to finance these by hiking taxes, it’s questionable if the amount raised would cover the planned 150 billion euros in spending. France already has a very high debt level of more than 100% of GDP and ran a budget deficit of 5.5% in 2023, in excess of the EU’s 3% limit.

 

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