There are typically two sides to each story, but the victory of Emmanuel Macron in France’s recent general election is widely accepted to have had a galvanising effect on the European economy.
Shortly after the result, the Euro grew as strong as it has been against the dollar in half a year, reaching above $1.10 for the first time since the election stateside, which saw Donald Trump become President. Whilst a victory for the far right candidate Marine Le Pen put a big cloud over France’s future in the EU, a win for centrist Macron has provided the European Central Bank with a boost, and taken a large risk off the table in the eye of some economists.
The development represents a lift for global markets, and comes in close proximity to another risk which was averted after the Netherlands’ far right candidate Geert Wilders was also defeated in the country’s election, earlier in the year.
Talking to CNBC shortly after the election result, Prudential Financial’s chief market strategist Quincy Krosby stated that a Macron win could be seen as a victory for the financial markets: “Despite the low turnout, Macron’s victory is an unambiguous win for the French center, for Europe, and consequently for global markets,” adding: “We should initially expect a ‘risk on’ market before investors revert to fundamentals.”
Now investors’ attention is expected to turn to the reforms which Macron has promised to put in place as President.
Other experts, including the Monaco-based banker, Gérard Cohen, concurred with Krosby’s view, but stressed that Macron has a lot of hard work ahead of him.
Monaco’s Gérard Cohen said: “There is no doubt that Emmanuel Macron was the favoured candidate for the financial markets. The result also represents a landmark in that Macron is the first President in modern times not to represent France’s two mainstream parties. Now Macron must face challenges including a stagnant French economy, and the complexities of Brexit negotiations with the UK.”
Further positives for the markets could transpire if Macron follows through on his pledge to cut corporation tax, and embarks on an expected €50 billion public spending spree. Given his potentially pivotal role in Brexit negotiations, Macron has the ability to put a cloud over the GBP, further strengthening the position of the Euro.
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