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French business leaders are racing to forge ties with Marine Le Pen's far-right party in a bid to push back against the radical tax-and-spend policies of a rival left-wing coalition in the country's swing parliamentary elections.
Four senior executives and bankers told the Financial Times that a left-wing coalition – polls show it is the strongest force challenging Le Pen – would be worse for business than the Rally National's unfunded tax cuts and anti-immigration policies.
“RN's economic policy is a clean slate and businesses think that will help move it in the right direction,” a Cac 40 business executive said of Le Pen's party, which is leading other parties ahead of two votes on June 30 and July 7. “The left is unlikely to soften its hardline anti-capitalist policies.”
Another large French company leader and investor added: “If you had told me two weeks ago that the business community would be rooting for RN and would be even more supportive, [President Emmanuel] If Macron had left office, I wouldn't have believed it.”
Both men spoke on condition of anonymity for fear of commenting publicly on politics during a lightning parliamentary election campaign sparked by Macron after his centrist coalition suffered a crushing defeat to the RN in European elections.
Jordan Bardella, a top aide to Ms Le Pen who is expected to become prime minister if the RN wins a majority, had already begun courting business leaders at closed-door meetings in recent months, investment bankers and business executives in Paris said.
Jean-Philippe Tanguy, the RN MP responsible for economic policy, said he was receiving calls from lobbyists, investors and companies eager to understand the party's plans.
“We told them that RN will contain the budget deficit and present a credible plan,” he said. “The market will be tough on us, so we have no choice but to do so.”
Markets reacted to the political uncertainty, sending the blue-chip CAC 40 index plummeting more than 5% between the election announcement a little over a week ago and Monday's close.
The benchmark spread between French and German government bond yields, a market barometer of the risk of holding French debt, rose 0.31 percentage point after the election was called, its sharpest weekly change since the 2011 euro zone debt crisis.
Another senior government official said the prospect of either far-right or far-left parties dictating France's economic strategy was “a choice between plague and cholera”.
Both the far-right and the left-leaning New Popular Front (NFP) coalition want a fundamental break with Macron's pro-business economic policies.
The president cut production taxes on corporations, making it easier for them to fire workers, and enticed foreign companies like JPMorgan Chase, Pfizer and Amazon to invest in France. Unemployment is falling and the country is not in recession like many other European countries.
But his administration has significantly expanded public borrowing in the midst of the COVID-19 pandemic and energy shocks related to the war in Ukraine.
The RN has not published a full economic program but has signalled that after a public audit it may roll back Macron's flagship pension reform later this year, which it has made a key election pledge.
The party says it will stick to its promise to cut value-added tax on energy and fuel, which the government says would cost 16 billion euros. But in a move by the far-right party to reassure voters and markets, Bardella on Monday night postponed a 7 billion euro VAT cut on essential goods. RN also plans to give preference to French companies in procurement, which it claims violates EU competition rules.
Ms. Le Pen has sought to reassure businesses. “The financial markets don't really understand the National Coalition's plans,” she told Le Figaro newspaper on Sunday. “They have only heard a caricature of our plans. When they read about them, they find them rather rational.”
The left-wing NFP coalition has not made any similar proposals, but it argues its economic plan is more responsible because it plans to raise taxes by billions of euros to pay for the spending hikes.
“We will fund this plan with money coming from the wallets of those who can afford it the most,” said Socialist Party leader Olivier Faure.
The NFP's policies include repealing Macron's pension reforms, raising salaries and welfare benefits for civil servants, raising the minimum wage by 14 percent and freezing the prices of basic food and energy.
The bill would reintroduce a wealth tax, eliminate many tax breaks for the wealthy and raise income taxes on high earners.
Business leaders are pushing back against the idea. “The economic policies of the left are totally unacceptable and would take France away from capitalism,” said one prominent businessman struggling with his electoral choice. “Mr. Bardella may feel safe, but the far right is a threat not just to the economy but to democracy.”
Others are more optimistic: Mathieu Pigas, an investment banker at Centerview, which specializes in sovereign bond advisory, said the French economy is “protected by the euro and the EU itself,” despite long-standing criticism from the euroskeptic French Liberal Party.
“The historical irony is that the euro [the economic impact] “Whether from the left or the far right,” he told L'Express magazine.
Additional reporting by Ben Hall in Paris
