Elections, elections, elections… it’s like 2017 can’t get enough. It was France’s turn last week, when they went to the polls in the first round of their runoff for prez.
Two candidates (out of eleven – who would even have time to find out about eleven people’s policies?!) got through – former banker Emmanuel Macron and fiery far-right politician Marine Le Pen. People in France will vote again on 7 May to decide between them.
While most newspapers were talking about what it means that Le Pen got to the second round (she’s a pretty controversial candidate, for reasons we’ll explain later on), the financial press was focusing on a different story: why the euro, and a bunch of stock markets with names like DAX and FTSE, rose in value as soon as the news of the winners hit the headlines.
They also kept talking about ‘markets breathing a sigh of relief’, which we thought was weird because didn’t think a market could breathe, but whatever.
Alright, jargon-y bit coming up: stick with us. Basically, people who invest in businesses and banking in France and across Europe (the DAX is an index of the value of Germany’s biggest companies, and the FTSE is the British version) were pretty nervous about the idea of Le Pen becoming president. No-one was sure who was going to win this first round, so they steered clear of putting too much cash into their ‘stocks’ before they knew what was going to happen.
But now that Macron is through to the second round, they’ve calmed down, and actually got pretty excited – partly because they like Macron, and partly because they think Le Pen doesn’t stand a chance at winning against him (although, a lot of the same people didn’t seem to think Brexit or Trump were going to happen either…just saying.)
A bit about Emmanuel Macron
Macron is only 38, pretty young for a president candidate. He used to work in a bank called Rothschild, and then became finance minister under the current president. He’s super pro-EU, and generally likes bringing down barriers to trade with different countries and keeping borders open. He thinks 'globalization' – the way that economies around the world are becoming more and more closely knitted together – is a good thing.
And then there's Marine Le Pen
Marine Le Pen is definitely not pro-EU – she once called it an “antidemocratic monster” which she wants to “prevent from becoming fatter and grabbing everything by its paws.” She’s calling for a France to get out of the union (she’s calling it ‘Frexit’…geddit?) and wants to bring back the old French currency, the franc, to use as well as the euro. She’s anti-open borders, wants to tax foreign companies who hire foreign workers, and plans on giving French companies priority on contracts from the government.
So what's got the financial world so worked up?
A Macron presidency would definitely be better news for people in the financial world, who tend to be more pro-globalization and anti-tax. They’ve said before that they would probably sell a lot of the stock they hold in French businesses and government if Le Pen came into power, which could be bad news for French businesses.
They’d also downgrade the country’s ‘credit rating’, which sounds like a pretty lame threat, but actually means kind of the same thing as if your own credit rating is lowered – it’s way harder to get people to trust you and do business with you.
But it looks like they’re not going to have to worry. Macron has about 60% of public support in the polls right now, and a lot of the other candidates who lost are now getting their parties to back him in an alliance against Le Pen.
Still, whether or not ‘markets’ are happy, it’s still true that a lot of French people support Le Pen – they're pretty unlikely to stay quiet if Macron wins, so he’s going to have to come up with some policies for France’s economy that keep everybody happy. We’re not jealous of that job.