ZEW Economist Holger Stichnoth on the Outcome of the French Legislative Elections

French President Emmanuel Macron has lost the absolute majority in parliament with his Ensemble coalition. Important reforms thus become bargaining chips. Professor Holger Stichnoth, head of the Research Group “Inequality and Public Policy” at ZEW Mannheim, has commented on this matter:

“Without a majority of his own, President Emmanuel Macron will be forced to seek new allies in parliament for every legislative project. This is not a good signal for the economy. So far, the absolute majority has allowed Macron to pursue a political agenda that is predictable and that everyone can rely on. The political stalemate in France may also become a problem for Germany. Now, the EU’s second largest economy is in danger of being paralysed for quite some time, as constructive cooperation between the centre around Macron, the new left alliance NUPES and the extreme right – three blocs of roughly equal size – is hardly possible. A coalition with the conservative Les Républicains (LR) could provide stable majorities, but this has already been ruled out by the LR party leader. However, the new situation also offers the chance that the expected fierce social conflicts will be carried back to parliament, where they could be at least partially defused by necessary parliamentary compromises.

At the same time, it is at least as likely that parliamentary and extra-parliamentary opposition groups will reinforce each other and thus delay or dilute important reforms. In this case, it is likely that Macron would have to dissolve the assembly and call a snap election before the end of his five-year legislature. For France, and thus also for Germany and Europe, much would be at stake again.”