Business must relax about French election, says Euronext CEO | USAEMALL.com

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The French chief executive of Europe’s biggest stock exchange group has appealed for business leaders to stay “calm” ahead of the country’s looming snap elections, saying that neither the far-right party or a new leftwing alliance would be able to enact their policy pledges.

Stéphane Boujnah, head of Paris-based Euronext, told the Financial Times that the plans of both Marine Le Pen’s Rassemblement National (RN) party — which polls suggest will win the first round vote next week — and the leftwing Nouveau Front Populaire (NFP) are “a concern for the future of the French economy”.

But he added: “I suggest that everyone keep calm and wait until July 7 or July 8 to analyse the results.

“I can hardly imagine that in the event one of these two forces get into the office that they will be able to implement everything they promise because of the combination of rating agencies, unions”, pressure from the EU and the president’s power, which would “mitigate the impact of any outlier or [inexperienced] party” doing what they want.

His comments come as investors fret over the potential impact of the RN or the NFP if they were to come to power, since both promise a break with President Emmanuel Macron’s pro-business policies. 

France’s Cac 40 stock index has fallen about 5 per cent while the gap between French and German benchmark borrowing costs — a market barometer for French political risks — has soared since Macron’s announcement earlier this month.

French executives are privately seeking to court the RN, which is yet to issue a formal economic programme, but has said it wants to cut value added tax on energy and potentially lower the retirement age. Both moves would add to France’s already heavy public debt.

Meanwhile the leftist NFP, currently second in the polls, has put forward a radical tax-and-spend agenda, which includes raising wealth and inheritance taxes and increasing income tax for top earners. The NFP is a group that includes the far-left party known as La France Insoumise (LFI), centre-left Socialists, Greens and Communists.

Boujnah, who has led Euronext since 2015 and previously worked as a banker at Santander and Deutsche Bank, said the key question for both the NFP and the RN “is how long will it take for them to water down explicitly their ambition”. It was one thing “to propose things that sound [and] smell extreme to be voted; another one . . . to run a country and be confronted with complexity”, he said. 

“The risk of a Liz Truss mini budget, forex crisis does not exist because of the euro,” Boujnah said, referring to the gilt market chaos triggered by the former UK Prime Minister in 2022. France’s finance minister last week warned the country could face a similar crisis if the RN wins the election.

The European Central Bank’s chief economist last week dismissed the idea that intervention would be required in France’s government debt market after the sell-off.

Boujnah, whose company runs trading and listing venues in cities including Paris, Amsterdam and Lisbon, added that either outcome “is definitely less good than with the incumbent Macron because Macron is definitely one of the most pro-Europe, pro-business presidents that France ever had, and I believe that it will be different”.

“There are two unknowns: how much time it would take both of them to work down their programmes when they face reality, and second, whether they mean what they say,” he added.

At a press conference in Paris on Friday, the NFP outlined plans to increase spending by €25bn this year and then take the total to €150bn by 2027, which is the end of Macron’s term. The spending will go to boost spending power for households, fight climate change, and invest in public services.

“Our spending will be covered by our revenue,” said LFI’s Éric Coquerel, referring to planned tax hikes. He pledged they would not increase France’s budget deficit.

The RN has not costed its policies but party chief Jordan Bardella, its potential prime minister, said on Thursday that immediate measures to lower VAT on fuel and electricity from 20 to 5.5 per cent would cost €12bn. 

Proposals by both parties to repeal Macron’s pension reform and reduce the age of retirement from 64 to 62 for most citizens would cost €13bn, based on expected savings from Macron’s reform.