investment insights
First-round French vote leaves far-right short of absolute majority
Key takeaways
- The French populist Rassemblement National (RN) gained a third of the first-round vote in parliamentary elections, leaving it unlikely to achieve an absolute majority. A left-wing alliance placed second with 28% and centrist parties earned 21%
- The second round vote on 7 July may see an unusual number of three-way races, unless the left-wing and centrists agree to a customary block of far-right candidates
- The most likely result looks like a ‘hung’ parliament that risks political paralysis, either with a caretaker, or RN-led minority government. We have revised our probabilities for the three scenarios
- Financial assets have begun to re-trace following the first-round results.
In first-round elections yesterday, the French electorate gave the populist ‘Rassemblement National’ party a 33.2% share of vote, in line with expectations. The ‘Nouveau Front Populaire’ (NFP), an alliance of left-wing parties, secured the second-largest share of votes with 28%, and the ‘Ensemble’ centrists, represented by Prime Minister Gabriel Attal and including President Emmanuel Macron’s ‘Renaissance’ party, placed third with 21%.
It gives the RN party a relative majority, without an absolute majority, which would require at least 289 of the national chamber’s 577 seats.
However, the first round results mask a huge amount of uncertainty around the final makeup of the French parliament. It creates an unusually high number of three-way races for parliamentary seats, making forecasting the result very tough: traditionally the first-round leader goes on to win a large share of constituencies in the second round, but this is less clear-cut.
The final outcome depends on how the centre and left-wing parties choose to field their candidates in the second round of voting on 7 July. Historically, French political parties have coordinated to block the far-right from gaining power. The crucial factor is the centre and left wing’s second-round strategy, and the result from any negotiations among them. Jean-Luc Mélenchon, leader of the left-wing ‘France Insoumise’ (LFI) party, has said his party’s candidates who placed third will withdraw. The centre has also taken a similar approach, as stated by Mr Attal, although making an exception for run-offs against far-left LFI candidates. The deadline for such agreements is the end of 2 July.
The most likely result looks like a ‘hung’ parliament that risks political paralysis, either with a caretaker, or hard right-led minority government, at least until the next presidential election scheduled for April 2027 (see table).
The country has experienced similar ‘cohabitations’ in the 1980s and late-1990s-early-2000s, but it would leave domestic legislation gridlocked and reduce the likelihood that the country’s fiscal deficit will be addressed.
The key question in a possible RN win would be how they choose to govern. Would they take a confrontational approach and break with the European Union on topics including the budget? Or a more conciliatory approach, similar to the far-right Italian government of Giorgia Meloni, and so approach the political centre on many issues?
Financial markets have priced in the potential for a paralysed French political environment since President Macron dissolved the assembly three weeks ago. The spread between French 10-year OATs or ‘Obligations assimilables du Trésor,’ and German sovereign Bunds widened in the wake of the decision to dissolve parliament while the French CAC40 index declined 6.5% over the month of June, and the euro recorded its biggest decline in a year against the dollar. Following the first-round results, these market moves have partially re-traced.
For further analysis, including a table of scenarios, probabilities and asset class impacts, please click here.
Read also our CIO Office Viewpoint following the European Parliament elections.
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