Let’s be frank, if there is anything that 2016 has taught us, it is that Marine Le Pen’s bid for the presidency can no longer be written off as a far-right pipe dream. The surprise vote for the UK to leave the EU and, more recently, the rise of Donald Trump should be taken as serious bellwethers for the 2017 French election. Moreover, In the event that Le Pen takes the helm, the traditional champions of the Eurozone, France, could provide the final blow to end the union and likely kill the EUR in the process.
To understand Le Pen’s rising appeal one only has to look at two of her central platforms, immigration and Euroscepticism. Starting with immigration, the Syrian refugee crisis has been fuelling anti-immigrant sentiment across Europe and taking a look at Sweden provides Le Pen all the material she needs to swing popular opinion. Currently, around 16% of the country’s population was not born in Sweden and last year 163,000 individuals applied for asylum. On its own, these figures might not be taken immediately as a negative. However, there is a growing opinion that the influx of immigrants is stretching Sweden’s ability to cope financially, all whilst fuelling a spike in crime and racial tension. It comes as little wonder then that Le Pen is able to play on fears back home that a similar fate could await France if immigration is not kerbed.
These immigration fears feed directly into one of Le Pen’s other key policy platforms, Euroscepticism and the potential for “Frexit” to occur. Often using the threat that North African and predominantly Muslim immigration as a focal point of her arguments, Ms Le Pen is shifting attitudes against the EU as she espouses the view that the union as impeding France’s sovereign right to police its borders and preserve its culture. Unfortunately for those who are pro-EU, this message is beginning to resonate, especially in the wake of the slew of terror attacks. As a result of this growing mandate, under Le Pen, chances of France leaving the EU are worryingly strong. What’s more, the National Front leader has only been emboldened by the UK’s referendum on EU membership as the long-term effects of Brexit are still unclear and only last week we saw some rather solid economic data come out of the UK.
Some may remain sceptical that Le Pen can swing the presidency but given her recent surge in the polls, one can’t rule her out in the post-Trump era of politics. Populism has proven itself to be making a resurgence and the National Front leader has a dangerous charm which, when combined with her populist platforms, could spell an upset for the French Election. But what does this mean for the EUR one might ask? Well, anyone that thinks the departure of the third largest economy in Europe from the Eurozone so soon after the loss of the UK will leave the EUR unscathed is at odds with reality. Even in the best case scenario where the EU limps on after a Frexit, faced with a protectionist USA and a slowdown in China, the prognosis for the European Union and the EUR is not good.
Ultimately, the EUR is likely going to be under siege for the next year or so and this could even result in the chaotic demise of the currency. Both the resurgent USD and growing fears that Le Pen could effectively end the EU with her victory will be at the forefront of market concerns and these fears are already being priced in. Consequently, French Presidential polling data should be added to every trader’s economic calendar as it could soon be the key news to watch for the Euro.
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