What Does The French Election Do For US CRE

Joel Ross

While Emmanuel Macron won the French presidency by a very wide margin, reality is 35% voted for Marine Le Pen, an unusually large number voted to abstain completely and many did not vote at all. While the numbers have not yet been released, Macron won a much smaller number of the voting public than the vote tally would suggest. Just as important, the Parliamentary election is not for another month and he has no organized party, so his candidates are also running with no official backing. It is highly unlikely his people will obtain a majority and it is also very unlikely he will be able to cobble together a solid coalition with the establishment he just defeated. So while it is good that Le Pen and her extremist views lost, France will likely remain a mess. The Italians tried a reformist candidate, and when it came to implementing his badly needed reform plans, he ended up having to resign for lack of support for them. It is very possible the same will be the case in France now, and the result will be not dissimilar to the US, where the opposition Democrats are working to stop anything from getting accomplished, even as some of them agree with the Republican position.

So in the end what is most likely is that the EU remains weak, despite the small improved economic stats. Last quarter’s 1.8% GDP annual growth rate is nothing to get excited about, and is far from what is needed to pull the EU out of its doldrums and recession situation. With France likely to be stalemated, Italy going nowhere since the reform plans were defeated, and Brexit quickly ramping up to get very ugly and be a hard Brexit, and Trump demanding they contribute their fair share to NATO, it is unlikely we will see any real change or economic strength in the EU this year.