French Minister Warns of Truss-Like Debt Crisis If Le Pen Wins
(Bloomberg) -- Finance Minister Bruno Le Maire warned that France would be plunged into a debt crisis similar to one sparked in the UK two years ago if far-right leader Marine Le Pen were to win legislative elections slated for the end of the month and implement her economic program.
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He said at an event in his former constituency in northern France that policies the National Rally party has in the past supported — such as cutting sales taxes and reducing the retirement age — would cost hundreds of billions of euros.
“A debt crisis is possible in France, a Liz Truss scenario is possible,” he said, referring to the former UK prime minister whose short term in office sparked a selloff in government bonds.
Le Maire, who has served throughout Emmanuel Macron’s seven years in office, said policies the National Rally party has in the past supported, such as cutting sales taxes and reducing the retirement age, would cost hundreds of billions of euros. They have not yet detailed proposals for this election.
The minister’s comments follow Macron’s decision to dissolve the National Assembly and call snap parliamentary elections in France after his party was trounced by Le Pen’s National Rally in EU-wide voting on Sunday.
French equities posted their biggest two-day decline in a year as banking stocks fell along with the country’s bonds amid the turmoil. France’s benchmark CAC 40 Index ended Wednesday’s session 1.3% lower, bringing the total decline over the past two days to 2.7%.
The yield on 10-year French bonds jumped as much as 10 basis points and widened the spread over equivalent German bonds to the highest level since March 2020 on a closing basis.
National Rally President Jordan Bardella said Tuesday night that his party was getting closer to being able to win a majority in the ballot. The 28-year-old political leader expects several dozen lawmakers from the conservative Republicans to join forces with National Rally, he told France 2 television in an interview late Tuesday.
“On security and immigration, there are lots of Republican voters who share the same values as the National Rally voters,” he said.
Eric Ciotti, the head of the Republicans, earlier in the day called for his party to work with National Rally, though his words drew immediate calls for his resignation from colleagues within the party.
Prime Minister Gabriel Attal described Macron’s decision as “tough and brutal,” but told TF1 television that the government’s mandate is to act against “the chaos and disorder” threatened by the far right and the far left.
According to a poll of voting intentions published on Tuesday, National Rally would win the first round of the French legislative election with 35%.
Macron’s group would get 18% if left-wing parties form an alliance, or just 16% if they stand independently, the survey by Ifop-Fiducial for LCI, Le Figaro and Sud Radio showed.
The pollster interviewed 1,089 adults online on Monday and Tuesday, with a margin of error of between 1.4 and 3.1 percentage points.
Le Maire also said he will not run for a seat in parliament in the elections. It is not necessary to be a lawmaker to serve as a minister and Le Maire already chose not to put himself forward in the 2022 legislative election.
Bardella would likely become France’s next prime minister should the far right win a legislative majority next month.
Macron said his position as France’s president won’t be affected by the result of the legislative elections following a report that claimed he was considering quitting, which triggered a selloff in French government bonds.
The 46-year-old president was asked in an interview with Figaro Magazine what he will do if Le Pen’s far-right party wins the vote — due over two rounds concluding July 7 — and then calls for his resignation.
“It’s not the National Rally that writes the constitution, nor the spirit of it,” Macron said. “The institutions are clear, and so is the place of the president, whatever the result. It’s inviolable for me.”
--With assistance from Samy Adghirni.
(Updates with additional Le Maire comments in the fourth paragraph.)
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