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Uchronia and Marine Le Pen: but what about the markets?

20 March 2017

If Pétain had had a heart attack in 1940, we would all be Communists today: the June 1940 armistice would not have been signed, leaving the USSR time to rally to defeat Hitler without the help of the Americans. And Western Europe would now be part of the USSR, which would not have collapsed.

So what would have happened if Marine Le Pen had been elected in May 2017? The question is obviously highly speculative, and that is why it enters the realm of utopian uchronia: everyone knows that none of this will ever happen… “This is clearly not the most probable outcome,” cries the chorus of political scientists. The National Front gets all of its votes in the first round; it would need an abstention rate of 60% for it to win the run-off. Once political uncertainties have receded in Europe, the markets, which have been on a resolutely upward trend since August – shrugging off Brexit, the American elections and the Italian referendum – will welcome the resumption of European integration that we will surely see in conjunction with the reforms that will undoubtedly be undertaken.

However, in today’s B-series soap opera of a presidential campaign, the collapse of incumbent political parties, the populist wave in the West and a wave of attacks orchestrated by DAESH could cause the implausible to become feasible.

How would the markets react if the implausible did indeed transpire and the National Front’s promise of monetary, legislative, territorial sovereignty became reality?

All the big asset managers and the economic and political institutes unanimously conclude that the unprecedented situation with which we would be confronted in that case would at best result in national paralysis throughout the National Front’s term of office and at worst in a collapse through a decision tree:

  • Would Ms Le Pen win a parliamentary majority under the current electoral system? The answer is no.
  • Could she change the parliamentary electoral law between her election and the June parliamentary elections in order to usher in a preferential system and win an absolute or relative majority? The answer is again no.

Constrained from the first day of her term by an unprecedented form of cohabitation in view of the split between the various tendencies of the left, right and centre – not forgetting “En Marche” – a National Union led by Marine Le Pen would be impossible, leaving the populist president to govern by referendum.

Clearly anti-European, Marine Le Pen could call a referendum on “Frexit” (in the probable absence of a three-fifths majority of the joint houses of Parliament) by virtue of Article 11 of the French Constitution, which gives the President the power to hold referendums on matters relating to the organisation of government – relying on a groundswell of popular support. Let us suppose that the Constitutional Council does not invalidate the referendum leading to an exit from the euro...

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