German companies alarmed as French election threatens to disrupt the economy

After the first round of the election, Marine Le Pen, the presidential candidate of Front National, addressed her followers. German companies are closely monitoring the situation as France heads to the polls in snap parliamentary elections that could impact the country’s political center. Patrick Brandmaier, the managing director of the Franco-German Chamber of Industry and Commerce, expressed concerns about the potential negative impact on France’s attractiveness due to economic policy announcements from both the right and the left.

Marine Le Pen’s far-right nationalist National Rally (RN) has gained standing in the final voter surveys before the election, which will determine the balance of power in the National Assembly and will be conducted in two rounds. President Emmanuel Macron called for the poll after his centrists suffered a defeat to the far-right in the European Parliament elections. This decision has caused concern in financial markets and raised worries about France’s fiscal challenges.

Investors fear that victories by either the RN or the leftist New Popular Front (NPF) alliance could pose a threat to the French economy, the second-largest in the European Union. The possibility of increased government spending in Paris has also spooked companies, adding to existing concerns about the sustainability of France’s fiscal path. Rising premiums on French government bonds could further strain the state budget, analysts have pointed out.

The potential reversal of business-friendly reforms under Macron and an increase in taxes by the far-left or far-right are also sources of worry for German businesses. The outcome of the election and the future of France’s fiscal policies are causing uncertainty and nervousness among both French and German companies.