Date first published: 26/04/2022

Key sectors: all

Key risks: policy uncertainty; civil unrest; government debt


Risk development

On 24 April President Emmanuel Macron secured five more years in the Elysee after defeating his far right rival Marine Le Pen in the presidential run-off. Macron won 58.5 per cent of the vote compared to 41.5 per cent for Le Pen, who nevertheless achieved the far-right’s highest share of the vote to date – a sign of a divided society. Macron will aim to further his pro-business agenda and tighter European Union (EU) integration over the next five years, but social discontent over rising prices and a motivated far-left and far-right opposition ahead of parliamentary elections in June could pose challenges to the President.

Why it matters

As a passionate Europhile, Macron’s re-election was met with a palpable sense of relief in Brussels and among EU leaders. Le Pen, by contrast, is a steadfast Eurosceptic who favours distancing France from NATO. Her election would have been a populist upset akin to Brexit or the election of former US president Donald Trump. With Germany’s new Chancellor Olaf Scholz lacking the clout and confidence of his predecessor, Macron is now the leading EU statesman and is well-positioned to push his vision of Europe, at least politically. In terms of security policy, however, his vision of ‘strategic autonomy’ could falter. Russia’s invasion of Ukraine has vindicated the security preferences of the Baltic states which regard the US-led NATO alliance as critical to European security.


Over the past five years Macron has had mixed success in revamping the French social economic model and pushing closer EU integration. Tax cuts and labour market reforms certainly increased the country’s attractiveness to foreign investors. France ranked Europe’s most attractive country to investors, according to EY’s 2021 attractiveness index. Yet, social welfare reforms were frustrated by the disruptive gilets jaunes (yellow vests) protest movement which began as a fuel tax protest and morphed into a wider anti-government movement.

Macron had limited success in reforming the EU. He was ultimately unable to convince the so-called ‘frugal four’ – the Netherlands, Austria, Denmark and Sweden – or the EU’s leading economic power, Germany, of the merits of a single budget and shares fiscal rules. The bloc’s economic response to the COVID-19 pandemic, however, has been in line with French preferences with a EUR8000bln recovery fund and the temporary suspension of the stability and growth pact (SGP). Ordinarily the SGP aims to limit government debt to 60 per cent of GDP and a state’s annual budget deficit to 3 per cent.

Risk outlook

The first challenge facing Macron will be parliamentary elections on 12 and 19 June. Both far-left Jean Luc-Melenchon and Le Pen hope to break Macron’s current majority and force a situation of ‘cohabitation’. In this scenario, Macron would be forced to appoint a prime minister from another party to head a government which would largely control domestic policy. However, opinion polls indicate that Macron’s ‘La Republique En Marche’ and its allies are likely to secure a majority. Should Macron secure a majority as expected, he may need to adopt a more compromising style of governance to implement his programme. The proposal to raise the retirement age from 62 to 65, which comes amid a so-called cost of living crisis, has angered union leaders and is likely to face fierce resistance.