1. Results
For the first time
under the Vth
Republic, the incumbent
President is behind his main challenger.
The official results are as follows (I do not provide the
meaningless result from Jacques Cheminade):
One of the central conclusions of the campaign is the rejection of the EU as it currently works
and calls for increasing protectionism: even Sarkozy demands modifications
to the Shengen accord and Hollande a renegotiation of the Lisbon Treaty. A
quick analysis of the results show that, in one way or the other, the vast majority campaigned on a platform
that will lead to a frontal shock with Germany:
budget balance and austerity vs. social welfare and deficits, southern Europe
vs. Northern Europe, domestic demand oriented
growth vs. export oriented growth.
In addition, both
Sarkozy and Hollande built their programs on an over-optimistic GDP growth forecast
to cut borrowing at 0.7% in 2012, 1.75% in 2013 and 2% until 2016, well above
consensus (most politicians do overstate future growth to buy votes). and
neither is addressing the key issues holding back growth. For example, last
week the IMF revised down 2013 French growth to 1.0%.
Whoever is elected President
on May 6, he will not be able to hold by
his promises. This will have a number of consequences:
- Spread between OAT and Bund will widen
- The eurozone will again come under strain and attack from markets (i.e. investors)
- France will loose it AA+ and be downgraded (over a 18 months period, one notch if Sarkozy is elected, two notches if it is Hollande)
- Expect social unrest within 12-18 months, particulalry if Sarkozy is elected
Then, the Parliamentary
elections will come in June and
there is no chance whatsoever that the
current ruling party wins, even if Sarkozy is re-elected. The antagonism
with the Front National is too entrenched and the possibility for the Front
National candidates to have enough votes to remain in 1/3 of constituencies for
the second round.
If Sarkozy is not elected (the likely outcome as of today
since over 1/3 of Bayrou and 40% of Le Pen voters will abstain for the second
round, the rest will go +/- 50/50 for each remaining candidate), I also expect the current ruling party to fall in
shambles with infighting between Coppée (current Head of the ruling party -
UMP) and Fillion (current Prime Minister – a senior member of UMP) each
preparing for the next Presidential race in 2017 (Fillion will present himself
at the mayoral election for Paris).
I then forecast the Front National to try its utmost to
organize the opposition to the the socialists around its platform, with some with
the right wing of the UMP joining forces with the National Front, and possibly
Dupont-Aignan.
Source:
Ministère de l’Intérieur: Presidential elections 2012
http://elections.interieur.gouv.fr/PR2012/FE.html
Ministère
des Finances: Stratégie Pluriannuelle de Finances Publiques
http://www.budget.gouv.fr/files/mise-a-jour-rapport-economique-social-financier.pdf
Capital
Economics: French election won’t tackle key issues
www.capitaleconomics.com
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