paris-eiffel-tower

The French election actually falls into three stages. Not two as is commonly stated. Stage one occurs on Sunday, what happens in France, will probably have more impact on the UK than what happens when the UK electorate vote on June 8th.

Whichever way you cut it, barring some kind of momentous event, the UK election will probably result in an even stronger Tory majority. The only thing that can stop it from occurring is some kind of alliance of the Remain camp, one that includes disillusioned Tory MPs. Even a Lib Dem, Labour, Green Party and SNP alliance, would probably not be enough to stop the victory of Theresa May, but in any case, such an alliance is unlikely. Maybe, if you squint your eyes and apply a lot of imagination, you could conceive of some kind of centre ground pro-EU coalition, that could possibly form a force that could rob Theresa May of an outright majority, but such a plan, let’s call it the Gina Miller plan, would require an awful of work, and compromise for it to work.

So, let’s just assume that on June 9th Theresa May will be handed a mandate to pretty much do as she sees fit.

In France, however, the outcome is about as uncertain as you can get. And whoever the final winner is, unless the parliamentary vote goes in their favour too – and frankly for most of the candidates that looks unlikely, they probably won’t be able to implement most of their policies anyway.

That’s why there are three stages to the French election. Stage one occurs this Sunday, with the first round of voting for the position of President. The two candidates who gain the highest number of votes then go head to head three weeks later. But we also get a vote for parliament, how this turns out will be crucial. And there is a good chance that the new President will not be a representative of the winning party in parliament.

It does seem that the race to the French presidency boils down to a four-horse race. And it is a race that covers the entire political spectrum – perhaps missing out the socialist portion. At one end, you have Marine Le Pen, the Far Right National Front candidate, who many describe as a Fascist. To the left of her, but still some way to the right, is the Republican Francois Fillon – who was the favourite at one time, before he got engulfed in a nepotism scandal. Then we move to the left, and get the favourite to win the final vote, Emmanuel Macron – who did serve as the finance minister under Francoise Hollande, and was a big critic of Brexit, and very much a pro-EU candidate. He is often seen as something of a unity candidate, but since he is an independent, does not have a party behind him. He may however be able to unite French parliament, pulling together the centre ground. Then we miss a stroke, because the French socialist candidate, Benoit Hamon, is unlikely to be a contender. And then we move to the Far Left, with Jean-Luc Melenchon. According to the opinion polls – remember them – only five percentage points separate the top four candidates.

If Le Pen wins, and can gets parliament backing, a French EU referendum will follow.

If Melenchon wins, he will try to negotiate reform of the EU, and then hold a referendum. In a parallel universe, David Cameron and Jean-Luc Melenchon both try to get reforms to the EU at the same time – what an interesting place that must be, come to think of it, what a great plot for a book.

Of the four candidates, Macron is the most vehemently pro-EU.

France’s contentious 35-hour week is a major topic of debate. Fillon wants to scrap it, Melenchon wants to go further, and introduce a four-day week.

Melenchon also wants to monetise French debt – money is printed and used to eliminate the debt.

The far feft candidate is often referred to as a fire brand, but the policies of a four-day week, or monetising debt, are not as daft as they seem, other than that they may be 15 years too soon. In an age of accelerating technology, creating the potential of plenty, money printing and four-day weeks may well prove to be answers, but probably not right now.

Despite the uncertainty, the markets, who, as we keep hearing, hate uncertainty seem pretty calm. The yield on French government bonds has barely flickered, the CAC40 – the index of leading French companies – has been quite strong, and volatility, a gauge of uncertainty, has been low.

The markets, it seems, are assuming a Macron victory.

The latest terrorist attack in Paris, terrible though it is, may not have that much of an impact. Terrorist fears already seem built-in and oddly, Macron, seen as a voice of calm, and presidential, seems to be coming out of the latest atrocity pretty-well.

From a pure capitalist point of view, Fillon seems like the better candidate – to emphasise, that is if you are in the money game. But then polls suggest that in a two-way fight against Melenchon, he would lose, and that against Le Pen, it would be a close call. For that reason, Macron is the markets’ favourite, not because they prefer him to Fillon, but because they fear what might happen if Fillon reaches the final round. Macron, by contrast is expected to win any second-round tussle, quite comfortably.

It is the tragedy of Brexit that the UK’s best interests may be served, in the short run at least, by a Le Pen victory.

Just remember, ISIS and Al Qaeda want to see further erosion in trust between Christian and Muslim communities, a Le Pen victory – as indeed was the case of a Trump victory – is what they want.