France's general elections have been the cause of much concern in European industry, with the race between presidential candidates Emmanuel Macron and Marine LePen a high stakes one when it comes to the matter of France's future in the EU.
Far right candidate LePen has a strongly anti-EU stance, and a victory for her may well see further turmoil for the union, should France decide to go for a ‘Frexit’.
Relief rallies in financial markets following Macron’s first round win
The first round of the election was won by Macron. The polls predicted that he would win, however analysts have been reluctant to put too much faith in outcomes matching polls since the upsets of last year, where polls predicted Brexit wouldn’t happen and Hillary Clinton would win the US presidential race.
The final stage of the election process in France will take place in two weeks, and so LePen still has a chance to win, however the markets reacted very favourably all over Europe to the first round results. Relief rallies – as they are known in finance circles – are common after elections, however there is a sense that in this case, it is because European share trading markets would be much more confident in the event of Macron becoming the next president.
How could the elections affect manufacturing as an industry in France?
The most important effects of the French elections on manufacturing in the country will be connected to France’s relationship with Europe.
If Macron holds power, France will potentially continue to operate as a major player in European manufacturing, and there may be increased output as the possibility of France leaving the EU will no longer be hanging over them as in these pre-result times.
Should things swing the other way in the next round however, LePen would be likely to make moves to leave the EU, and France, like the UK, would need to negotiate terms for import and export within Europe. This may lead to an increase in manufacturing from French use, but it is likely that there would be less demand for French exports within the rest of Europe.
When the matter of leaving the EU is raised for any country there is little precedent on how this affects industries and employment sectors, however introducing that level of risk and uncertainty usually has negative effects at least in the short term.