EU election results and French politics

EU election results and French Politics

• Election outcome: The EU elections concluded with centrist parties, such as the European People’s Party, remaining in the lead. However, some far right parties such as Identity and Democracy and European Conservatives and Reformists also increased their presence in the European parliament. The new Commission will likely focus on priorities such as efficiency of climate regulations. Security and defence, as well as the EU’s geopolitical positioning, will become top priorities of the new Commission.

• The French snap elections: President Macron’s decision to hold elections now could have some upsides in the attempt to pursue a more stable domestic policy making, with more cooperation from non-far right opposition parties. In addition, he could benefit from a potentially better voter turnout in domestic elections, which are very different from European ones.

• Investment implications: This sudden call by President Emmanuel Macron for snap elections has created some volatility, both in equities and fixed income markets in France. France's budgetary situation will remain in focus. French government debt markets are very liquid and in addition, the context is supportive, with investors wanting to lock in higher interest rates before the ECB cuts rates further. On the euro, we are cautious in the short term, but do not see structural weakness.

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