A new Citi Research report explores two baseline scenarios for France's elections: a deadlocked parliament and an outright victory for the far right. Either could disrupt not only France's fiscal performance but also Europe's ability to accelerate its transformation at a time of rapid geopolitical and economic change.
The following is a freely accessible summary of a published Citi Research report.
President Macron’s decision earlier this month to dissolve the French National Assembly and convene snap elections could have far-reaching consequences not just for France but also for Europe.
In a new report led by Arnaud Marès, we explore what we see as a clear and present risk that France finds itself either with a government generally opposed to policies being determined at a continental level, or with a deadlocked parliament that can’t ratify any meaningful policy initiatives. Such outcomes would arrive at a time when a non-cooperative stance from France could prevent the European Union from accelerating policies related to energy, defense, industry and trade that it absolutely needs if it’s to keep up with other global powers.
France’s legislative elections will take place in two rounds on June 30 and July 7, and consist of 577 individual elections. Any number of candidates can take part in the first round, with candidates receiving more than 50% of the votes winning their elections. Should that threshold not be reached in a given race, the two leading candidates and any candidate who received votes equaling or exceeding 12.5% of the number of registered voters advance to the second round. The higher the participation rate, the more three- or four-way races may take place in that second round. Another point to consider: France’s constitution forbids any dissolution similar to Macron’s June move within a year of the new election. When holidays are taken into account, that means whatever parliament emerges will remain unchanged until at least September 2025.
Viewed through an institutional lens, three outcomes are possible. We’ve chosen to describe these outcomes generically before mapping them against the current state of French politics.
The first possibility is a standard majority government, with the president’s party winning an absolute majority in the National Assembly, which would lead to the president appointing a prime minister.
A second scenario sees the president’s party fail to achieve an absolute majority in the election but then assemble one through a coalition of parties. This would lead to the appointment of a prime minister to lead this coalition.
In our third scenario, either a party other than the president’s or a coalition excluding the president’s party achieves an absolute majority. This is known as cohabitation, with the president compelled to invite the candidate designated by the leading party to form a government. France has seen periods of cohabitation before, and it can be a relatively stable arrangement: The government controls most areas of policy, but the president retains at least notional control of “reserved” powers, including many public appointments, and represents France in the European Council. The stability of such an arrangement depends on how aligned the president and government are on matters of defense and international relations.
A fourth scenario would be unprecedented since 1958: No party commands a majority, and no coalition can emerge. Such a deadlock would leave an appointed prime minister either unable to pass meaningful legislation or facing a no-confidence vote. As there are limits on how many no-confidence votes a member of France’s parliament can support, within a matter of months members of parliament would be unable to bring the government down and the government would be unable to take meaningful policy steps domestically or contribute to European policy decisions.
Those are the possibilities. How will the elections play out in practice? That’s made more complicated by the blurry boundaries between France’s political forces.
Numerous leftist parties have come together to form an electoral alliance, which increases the likelihood of individual candidates being elected but doesn’t assure unity once they are. We see the differences between the various parties as too pronounced and too deeply rooted for a leftist alliance to survive long past July 7.
In the center, Macron has historically gained support from an aggregation of individual parties that have proved reluctant to dilute their individualism and become a single established party. A severe defeat for Macron could see these parties split and go their separate ways, variously left and right.
The far right (RN) appears as a more stable bloc.
Polls suggest France is extremely divided: RN scores a relatively stable 30% to 35% of the vote; the left alliance is polling at 25% to 28%; Macron’s coalition is at 18% to 20%; and the conservatives (LR) poll around 7%. Polls generally project RN missing out on an absolute majority (289 seats) by at least 30 seats, with left ending up with 150–200 seats and the incumbent center being reduced to around 100 seats. But RN might be able to reach the 289-seat threshold in a coalition with LR members. We attribute a subjective probability of 40% to an outright RN victory, with the same probability of an institutional deadlock and a 20% probability of a broad coalition emerging from the center. At the moment we see no realistic chance of the left alliance winning an outright victory. Turnout will be key, with high turnout possibly favoring extremes, more specifically the far right.
As for what’s at stake, at the domestic level public finances are a source of primary concern. We don’t see how any outcome avoids a further deterioration of France’s fiscal trajectory: The far right professes little interest in abiding by European fiscal rules; deadlock offers no realistic possibility of curbing expenditures; a centrist coalition would be a reluctant one that would want protection from financial restraint for core electoral clienteles; and if a leftist alliance did somehow win, it would certainly opt for large increases in public expenditures.
But we see the stakes of this election as more consequential for Europe. The continent has entered a critical period of its history, with a laissez-faire attitude toward markets giving way to increased emphasis on industrial policy, strategic choices and a more defensive approach to international relations. To avoid jeopardizing its long-term economic potential, the European Union must assume national governments’ prerogatives on matters such as energy policy. Either institutional deadlock in France or the arrival of a government generally hostile to such pooling of powers could stall Europe’s efforts.
Existing Citi Research clients can follow this link to access the full report.
