Why The French Elections Are Important To You The Trader

France’s upcoming presidential election is a major test for European unity. For traders, it is also indicated a possible trend for Euroscepticism in a region that is growing more hostile to integration.

When it comes to the French elections, there is no shortage of scary outcomes from a financial perspective. The biggest risk is undoubtedly Marine Le Pen, the far-right National Front leader who has vowed to close France’s borders and exit the euro. Le Pen’s victory would have major consequences not just for France, but the rest of Europe.

On the opposite side of the political spectrum is Jean-Luc Melenchon, the Communist-backed leader who recently surged in the opinion polls to catch Francois Fillon. Melenchon is also proposing radical reforms, such as reducing the work week and implementing massive economic stimulus.^[1]

At the centre is Emmanuel Macron, an independent candidate who has put Europe at the forefront of his political platform.^[2]

The latest polls show a four-way race that is too close too call. Although Macron and Le Pen hold the No. 1 and 2 spots, pollsters say the race is wide open when the margin of error is factored. No candidate is expected to win a majority in the first round of voting, paving the way for a second-round run-off election on May 7. Macron is widely expected to win in a run-off against Le Pen.

However, analysts are quick to remind traders not to read too much into the polls. After all, surveyors were shockingly bad at predicting Brexit and Donald Trump’s U.S. presidential victory.

Even if Le Pen is soundly defeated in a run-off election, the relief traders will feel is expected to potentially be short-lived. That’s because the National Front is set to make huge inroads in parliament one month later, a sign that far-right populism is only just beginning to mobilize.^[3]

The rise of the far-right is a huge threat to the euro and the pan-European project as a whole. It could also undermine confidence in a region that has only recently shown signs of economic progress. From an investing perspective, instability tends to breed uncertainty and ultimately risk avoidance.