Get your free copy of Editor's Digest
FT editor Roula Khalaf picks her favourite stories in this weekly newsletter.
The chief executive of Europe's largest stock exchange group has urged business leaders to remain “calm” ahead of France's upcoming general election, saying neither the far-right party nor a new left-wing coalition will be able to deliver on policy promises.
Stephane Boujnat, head of Paris-based Euronext, told the Financial Times that the plans of both Marine Le Pen's National Rally (RN) party – which polls suggest is likely to win the first round next week – and the left-leaning New Popular Front (NFP) were “a concern for the future of the French economy”.
But he added: “I would urge everyone to remain calm and wait until July 7 or 8 to analyze the results.”
“If either of these two forces were to take power, the combination of pressure from rating agencies, trade unions, the EU and the power of the president makes it highly unlikely they would be able to deliver on all they promised. [inexperienced] A “political party” that does what they want.
His comments come as investors worry about the potential impact if the RN and NFP take power, as both parties have pledged to move away from President Emmanuel Macron's pro-business policies.
France's CAC 40 stock index has fallen about 5 percent and the spread between benchmark borrowing costs in France and Germany, a market barometer of political risk in France, has soared since Macron's announcement earlier this month.
French officials have been informally approaching France's railways, which have yet to unveil a formal economic policy, but have hinted at cutting value-added taxes on energy and possibly lowering the retirement age – both moves that would add to France's already heavy public debt.
Meanwhile, the left-leaning NFP, currently second in the polls, advocates a radical tax-and-spend policy, including raising wealth and inheritance taxes and raising income taxes on high earners. The NFP is a grouping that includes the far-left party Insubordinate France (LFI), as well as the center-left Socialist, Green and Communist parties.
Boujnah, who has led Euronext since 2015 and previously worked as a banker at Santander and Deutsche Bank, said a key question for both the NFP and the RNs is “how long it will take for them to clearly tone down their ambitions.” [and] “It smells extreme to be voted out; it's something else to run a country and face the complexities,” he said.
“Thanks to the euro, the risk of a Liz Truss mini-budget or an exchange rate crisis does not exist,” Boujnah said, referring to the turmoil in the UK bond market caused by the former British prime minister in 2022. France's finance minister warned last week that France could face a similar crisis if the RN wins the election.
The European Central Bank's chief economist last week denied that intervention would be necessary after the French bond sell-off.
Boujnah, whose company runs trading and listing venues in cities including Paris, Amsterdam and Lisbon, added that either outcome would be “certainly worse than with the incumbent Macron, because he is arguably one of the most pro-European and pro-business presidents in French history and I believe the outcome would be different.”
“There are two unknowns: how long it will take for them to rethink their plans when reality hits them, and whether they mean what they're saying,” he added.
At a press conference in Paris on Friday, the NFP outlined plans to increase spending by 25 billion euros this year, raising the total to 150 billion euros by the end of Macron's term in 2027. The spending will be used to boost household purchasing power, fight climate change and invest in public services.
“Our expenditures will be paid for by our income,” LFI's Eric Coquerel said, referring to the planned tax increases, promising that they would not increase France's budget deficit.
The RN has not calculated the cost of the policy, but its leader and candidate for prime minister, Jordan Bardella, said on Thursday that emergency measures to cut value-added tax on fuel and electricity from 20 percent to 5.5 percent would cost 12 billion euros.
The parties' proposal to reverse Macron's pension reforms and lower the retirement age for most citizens from 64 to 62 would cost 13 billion euros, based on the expected savings from Macron's reforms.
