# France: Will a Macron victory reduce tail risk in Europe? Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2017-05-10 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Macron vs Le Pen: What a Run-Off Election Means for Europe Meta Description: Investment insights on the upcoming French election run-off between Marine Le Pen and Emmanuel Macron and its potential impact on global markets and Europe. URL: https://financedigest.com/france-will-a-macron-victory-reduce-tail-risk-in-europehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/img0473-840-1736843897153-compressed.jpg) By **JaisalPastakia,** Investment Manager at Heartwood Investment Management Marine Le Pen and Emmanuel Macron are going head-to-head in a run-off election this weekend. Our expectation is that the centre left and centre right will come together and prevent a Le Pen victory. In citing recent historical precedent, the last time an anti-establishment candidate stood in the second round was when Jacques Chirac won the [French presidency](https://www.financedigest.com/french-president-macron-reaffirms-that-pensions-system-reform-is-necessary.html "French President Macron reaffirms that pensions system reform is necessary") in 2002, with an overwhelming 82% of support against Jean-Marie Le Pen. We accept, though, that these are different times and populist parties have [gained a significant amount of traction](https://www.financedigest.com/carmine-color-market-will-gain-traction-at-7-9-amid-growing-preference-for-natural-food-ingredients-fmi.html "Carmine Color Market Will Gain Traction at 7.9% amid Growing Preference for Natural Food Ingredients: FMI") in the post-financial crisis years. However, we believe that Macron has the potential to unify [support from both sides of the political](https://www.financedigest.com/uk-financial-watchdog-urges-political-support-for-crypto-bans.html "UK financial watchdog urges political support for crypto bans") centre. He is a former Socialist [economy minister](https://www.financedigest.com/italys-giorgetti-gets-melonis-backing-to-be-economy-minister.html "Italy’s Giorgetti gets Meloni’s backing to be economy minister") who believes in providing social protection, but Macron is also a politician who accepts and advocates a market liberal agenda. **Short-term market reaction** A Macron victory would be viewed positively in the [short term](https://www.financedigest.com/liquidity-ratios-assessing-a-companys-short-term-financial-health.html "Liquidity Ratios: Assessing a Company’s Short-Term Financial Health"). This outcome may also encourage global [investors to look at Europe](https://www.financedigest.com/credit-agricole-and-caceis-to-buy-rbc-investor-services-europe-unit.html "Credit Agricole and CACEIS to buy RBC Investor Services’ Europe unit") once again, which would be supportive of our contrarian overweight position in European equities. [Macron is regarded as a transformational candidate who offers something new to French](https://www.financedigest.com/french-pm-to-unveil-pension-reform-in-big-test-for-macron.html "French PM to unveil pension reform in big test for Macron") politics. There are, though, questions as to what he can actually achieve longer term, as he is likely to be constrained by the French parliament, which approves the majority of domestic-related decisions. Much will depend on the outcome of the parliamentary elections in June. It is unlikely that either candidate will secure a parliamentary majority, since they do not belong to a traditional political party. En Marche is more of a movement rather than a party and it is unclear, at this stage, how many candidates it will field. The composition of the parliament will be important in terms of the new President’s ability to actually implement any electoral programme. The risk is that we get a fragmented parliament, resulting in ineffective government. **[Impact on Europe](https://www.financedigest.com/explainer-what-would-be-the-impact-of-russian-oil-sanctions-in-europe.html "Explainer-What would be the impact of Russian oil sanctions in Europe?") if Macron is elected** The presidential choice in France may have important repercussions for the wider continent. Both candidates have taken a binary position on the European Union: either pro or anti. Macron is calling for further European Union integration. One of his [key proposals is to create a separate European](https://www.financedigest.com/white-bullets-collaboration-with-polands-sygnal-association-significantly-reduces-ad-funded-piracy-in-key-european-market.html "White Bullet’s collaboration with Poland’s Sygnał Association significantly reduces ad-funded piracy in key European market") budget backed by a borrowing capacity and its ‘own resources’. He supports a common fiscal framework, a common [finance minister](https://www.financedigest.com/uk-finance-minister-hunt-to-make-statement-at-1000-gmt-source.html "UK finance minister Hunt to make statement at 1000 GMT – source") and the completion of banking union. These are all ambitious aims. If Macron were to be successful in advancing at least some of his pro-European agenda, it could ultimately stop Europe’s ‘naval gazing’ and allow the region to [move forward](https://www.financedigest.com/life-is-moving-forward-china-declares-new-covid-phase.html "‘Life is moving forward’: China declares new COVID phase") with advancing much needed governance reforms. This would all be viewed positively from a European perspective. However, for the UK, Macron would be another tough voice countering Theresa May in the Brexit talks. If Le Pen is defeated, is it the [end of populism in Europe](https://www.financedigest.com/factbox-europes-travel-disruption-set-to-continue-as-summer-ends.html "Factbox-Europe’s travel disruption set to continue as summer ends")? Not necessarily. Populist parties are still [gaining a meaningful share](https://www.financedigest.com/tesla-q2-deliveries-meet-analysts-estimates-despite-chip-shortage-shares-gain.html "Tesla Q2 deliveries meet analysts’ estimates despite chip shortage, shares gain") of the popular vote – whether in France, the Netherlands or Italy – and this has been sufficient in getting their voice heard and sway policy. For now, though, assuming Macron defeats Le Pen, [global investors will be reassured that the risk of an anti-establishment candidate taking charge of Europe’s second largest economy](https://www.financedigest.com/stocks-sink-on-fears-for-global-economy-capping-worst-h1-on-record.html "Stocks sink on fears for global economy, capping worst H1 on record") has been removed. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---