France: Heading for Policy Paralysis?
After the largely expected first round of parliamentary results, in which the far right won the most votes, equally expected has been the fact that both the centrist and left parties have already called for tactical voting to stop the right winning an actual majority in run-offs on Jul 7. It is still not beyond reality for the far right to get that majority but the nature of the two-step parliamentary system makes this unlikely. More likely there will be a hung parliament but with the right having the most seats. In such a scenario, the right is very unlikely to form a minority administration, realising that this power vacuum may only puncture their popularity. Instead, a caretaker or technocratic government may be formed, as parliament adapts to the reality that fresh elections can only be held 12 months hence. This though may lead to even greater policy paralysis than that which persuaded President Macron to call this snap election, compromising any ability and willingness to address growing fiscal problems with a structural budget gap stuck at 5% of GDP. The question is whether the EU will by sympathetic if France is seen breaking fiscal rules!
The far right National Rally (RN) as expected won the highest number of votes nationally, at around 33% ahead of the leftist Nouveau Front Populaire (NFP) coalition on 28%per cent and President Macron’s Ensemble alliance on 22%. The two-round process complicates seat forecasts for the second round but it is likely that the RN is on track to win the most seats in the National Assembly and potentially an outright majority — an outcome that would put the far right into government for the first time since the second world war with marked and uncertain reverberations ensuing. Indeed, at this juncture, it looks as if the RN could get anywhere between 230 to 315 seats, the NPF 115 to 200 and Macron’s centrist alliance 60 to 120. If those projections are correct and they are very wide, the most likely outcome probably remains a hung parliament – with none of the three groups reaching the 289 seats needed for an outright majority.
As a result, this would lessen Macron’s already fragile ability to force through some difficult structural and fiscal reforms, adding to already-growing debt sustainability questions. Admittedly, a government, even as a minority has options, most notably to use the article 49.3 procedure further, with Macron having used this constitutional tool to pilot through both the 2023 and 2024 budget laws, which allows finance and social security bills to go ahead without a parliamentary vote. This may be something a possible technocratic government may attempt but would have to contend with possible motions of no-confidence which it could very well lose. All of which suggests the next year may see effective policy paralysis, not just on vital fiscal legislation but widely so and with parliamentary divisions likely to be even more open and vocal.