Highlights:

• In the first round of the French Presidential election liberal incumbent Macron (27.8%) received the highest share of votes. As expected, he faces far-right candidate Le Pen in the 2nd round to be held on April 24.
• According to polls Macron will likely remain President, but by a much tighter lead than in 2017. The situation is fluid and there is no unitary support from other succumbed candidates.
• If Le Pen were to become President the reform process would largely stall (e.g. pension age), European projects be hampered and a clash with the EC likely mount. Even if Macron wins, there remains the risk that he loses parliamentary majority in the June 12/19 general elections – so that uncertainty will not be fully removed.
• Euro area financial markets will remain volatile into the run-off election. A second term for Macron would calm markets. On the contrary, the election of Le Pen would lead to a knee-jerk reaction and a lingering high risk premium that would manifest in full should the ‘extreme’ parties also do well in the forthcoming parliamentary elections.

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