September 27, 2022

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Jupiter is no longer ascending. French elections have brought a hung parliament, robbing President Emmanuel Macron of his majority, his authority and his credibility as a centrist bulwark against the far-right and the far-left. Fragile coalitions at the heart of the euro area’s No. 2 economy will make governing hard and reforms harder.

And for a European Union seeking to beef up defense, cut energy ties to Russia, and pursue closer integration, the risk now is of a France turning inward with little appetite for big changes.

The worse-than-expected vote share of Macron’s centrist alliance — 44 seats short of a majority — reflects mounting frustration with his governing style and with the health of the economy. Since beating far-right nemesis Marine Le Pen in April’s presidential elections, Macron has kept his head below parapet, cobbling together a technocratic government that’s now dead in the water.

Against the backdrop of a shrinking economy and record 5% inflation, Macron’s lightning-rod policies (like hiking the retirement age to 65) gave oomph to the anti-Macron vote. Far-left Jean-Luc Melenchon’s NUPES alliance, along with other left-wing parties, struck a chord by calling for price controls and retirement at 60. And Le Pen’s party actually managed to get its best-ever result, with a more than tenfold jump in seats. 

Macron’s visit to Kyiv alongside Italy’s Mario Draghi and Germany’s Olaf Scholz did little to change his standing. The vote looked more like a manifestation of the economy’s squeezed middle-class, as Publicis Chairman Maurice Levy describes it: One-third doesn’t vote, another third votes Melenchon to protest, and another more blue-collar third votes Le Pen because it feels left behind.

At the same time, the lack of any single winner reflects the messy reality of post-Covid, post-Ukraine invasion politics. The French state has ballooned during the pandemic, with debt at 113% of gross domestic product and a budget deficit at 7%. Fiscal rectitude may not be in vogue, but Melenchon’s call for extra annual spending of 250 billion euros didn’t instill widespread confidence either.

In theory, this kind of gridlock offers opportunities. With no other grouping able to take control, the road is open for Macron to strike a deal with the center-right Republicains or work with other parties on a case-by-case basis. Violent protests during Macron’s first term showed the dangers of a weak opposition, and history shows that past presidents on both right and left have been able to “cohabit” with political opponents when forced by parliamentary arithmetic.

But in reality, there’s a high chance of stitched alliances and coalitions being stretched to breaking point. There are as many parties as there are personalities, the economic outlook is bleak and the terrain of French centrism is increasingly narrow. Christopher Dembik, of Saxo Bank, fears this will look more like the volatile politics of Italy rather than the consensus-building of Germany. The first test of this will be planned measures to boost purchasing power due to be unveiled next month.

Speaking of Italy and Germany, Macron will have to do more outreach in Europe to achieve his goals if he’s hamstrung at home. Domestic and foreign policy are different battle-grounds, but influence and leadership in Brussels do overlap with economic credibility and the ability to pass legislation.

So while it’s a relief to Macron that Clement Beaune — his longtime ally and EU minister — managed to win a seat in parliament, this all looks a long way from the peak of Paris’s powers during Covid-19, when it convinced Berlin to reverse long-held taboos about closer integration.

Pressure on political incumbents isn’t only a French issue, of course: Spain’s Pedro Sanchez has been dealt a blow in Andalusian elections, while the U.K. is facing its biggest rail strike in decades.

Yet whereas the test of Macron’s mettle was once whether France could reform itself, now it will be whether France can govern itself. Exit Jupiter; enter Mars.

More From This Writer and Others at Bloomberg Opinion:

Brexit Threats in Wartime Are Doubly Wrong: Lionel Laurent

Draghi Toughens Italy’s ‘ Soft Underbelly’ Reputation: Rachel Sanderson

In Germany, Scholz the Bold Reverts to Scholz the Smurf: Andreas Kluth

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering digital currencies, the European Union and France. Previously, he was a reporter for Reuters and Forbes.

More stories like this are available on bloomberg.com/opinion

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