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The French presidential election – The macro and market risks of Le Pen vs Macron

The outcome of the French presidential election on 24th April could have far-reaching consequences for economies and markets. In a 21st April online briefing, Andrew Kenningham and Jessica Hinds from our Europe team, and Jonas Goltermann, the head of our FX Markets service, discussed some of the risks. The following are extracts from that conversation, edited for clarity: Q: What impact would a Le Pen victory have on the euro exchange rate? Jonas Goltermann: The immediate reaction would be uncertainty up and the euro down and then it would come down to what extent are we going back to the bad old days of trying to price that existential risk of a breakup of the euro-zone and if she took steps in that direction, or even if she was perceived to be leaning in that direction, I would guess the euro would fall easily towards parity...and we might see parity on the euro, even if Macron wins because there are quite a lot of things that are going wrong for the euro right now, completely separate from France. Q: If Le Pen wins, is a Frexit something that investors should be worried about or is that off the agenda? Jessica Hinds: I think it would be a little naive of investors to think that she's not moving away from the EU....she would not be a president that would be on board with the ever-closer union that Brussels is still going for. You would certainly see France, one of the founding and biggest members of the EU and one that's been exceptionally pro-Europe over the last 60, 70 years moving in a completely different direction and I think that would be worrying. Q: What would a second Macron term look like? Jessica Hinds: I think we're going to see a lot more emphasis at least in the early years on helping out households. There was a lot less of that in his first term – it was much more concentrating on his technocratic I think he's trying to obviously remembering how difficult the gilets jaunes protests were for him in 2018 I think he's trying to appear a little bit more in touch and helping out households that bit more. Watch our briefing ‘Macron vs Le Pen –What investors need to know to learn more about the risks around the 24th April election.