Europe | Politics & Geopolitics
France’s regional elections took place on 20 and 27 June to elect regional councils for a six-year term. These councils have no legislative powers but manage sizeable budgets. There are 12 in mainland France, plus Corsica and four overseas territories. The elections are held in two rounds using proportional representation party lists. If no list secures an outright majority in the first round, a second round is held with the parties that got more than 10% in the first. The régionales precede the presidential elections in April-May 2022 and are considered an indicator of the incumbent’s popularity. They revealed two key developments.
First, the traditional right led by Les Républicains (LR) made a comeback. But this was more at the expense of President Emmanuel Macron’s La Republique En Marche! (LREM) than of the far right (Table 1).
This article is only available to Macro Hive subscribers. Sign-up to receive world-class macro analysis with a daily curated newsletter, podcast, original content from award-winning researchers, cross market strategy, equity insights, trade ideas, crypto flow frameworks, academic paper summaries, explanation and analysis of market-moving events, community investor chat room, and more.
Summary
- The regional elections mark a comeback of the traditional-right LR, more at the expense of President Macron’s LREM than of Marine Le Pen’s RN.
- The regional elections also show the extreme right is not broadening its support and add to the likelihood of a new extreme-right loss in the second round of the 2022 presidential elections.
- The regional elections suggest a traditional-right/extreme-right second round could be as likely as an LREM/extreme-right one.
Market Implications
- The regional elections further lower the tail risk of a Le Pen victory and are therefore positive for French spreads and EUR.
The Traditional Right Makes a Comeback, at LREM’s Expense
France’s regional elections took place on 20 and 27 June to elect regional councils for a six-year term. These councils have no legislative powers but manage sizeable budgets. There are 12 in mainland France, plus Corsica and four overseas territories. The elections are held in two rounds using proportional representation party lists. If no list secures an outright majority in the first round, a second round is held with the parties that got more than 10% in the first. The régionales precede the presidential elections in April-May 2022 and are considered an indicator of the incumbent’s popularity. They revealed two key developments.
First, the traditional right led by Les Républicains (LR) made a comeback. But this was more at the expense of President Emmanuel Macron’s La Republique En Marche! (LREM) than of the far right (Table 1).
The traditional right scored 39% in the second round, up from 31% in the first round, 14% in the 2019 European Parliament elections, and 25% in the first round of the 2017 presidential elections. Meanwhile, LREM’s score fell to 7% in the second round, down from 11%, 22%, and 24% respectively. LREM made it to the second round in only eight of the 12 regions of mainland France. With fewer LREM lists to choose from, LREM first-round voters seem to have voted mainly for the traditional right instead. By contrast, the score of the extreme-right Rassemblement National (RN) was roughly the same in both rounds.
The Extreme Right Fails to Broaden Support
The second important fact to emerge from the régionales is the extreme right’s inability to broaden support among voters. Despite making it to the second round of every single region in mainland France, the extreme right did not win one. In Provence (PACA), a traditional stronghold, it lost in a head-to-head competition with the traditional right. Also, the extreme right’s share of the vote did not increase between the first and second rounds. And while turnout was higher in the second round by about 400,000 votes, the extreme right’s votes increased by about 100,000 only.
The Next French President Could Hail From the Traditional Right
We must interpret the régionales with caution. Turnout was the lowest of any election in post-WWII France at 33%, down from 50% at the 2015 regional elections. The pandemic is partly to blame, with many restrictions still in place and two postponements, initially from March to early June and then to late June. Participation in the 2019 European Parliament elections was 50%, 8% higher than at the 2014 European Parliament elections.
Still, the régionales show the re-emergence of traditional political parties and alliances, with LREM voters supporting the traditional right in the second round and the extreme-left voters the Socialists and the Greens. In this context, LREM seems to be struggling to find a political identity distinct from that of the traditional right and left. Its local base also remains weak, as shown by its poor showing in the second round of the régionales. This suggests a traditional-right/extreme-right second round could be as likely as an LREM/extreme-right one.