French Business Relieved As Macron Wins.
But Reform Depends On Parliamentary Vote.
“Mr Macron’s ability to push reform will depend on the strength of the parliamentary coalition he can assemble”
As France’s business community breathed a sigh of relief after centrist Emmanuel Macron won the presidency, auto stocks Peugeot and Renault consolidated the gains made after the first round result a couple of weeks ago.
In stock market trading the day after the result, Renault, owned 20% by the French state, was nearly 1.5% higher while Peugeot, in which France has a 14% interest and is currently in the process of buying General Motors’ Opel-Vauxhall subsidiary, rose slightly.
After the first round two weeks ago Renault rose nearly 6% and Peugeot close to 7%. Since then both stocks have been trading with little price change, anticipating a Macron victory.
In Sunday’s election, Macron and his “En Marche” movement won 64% of the vote to nationalist Front National Marine Le Pen’s 36%. Opinion polls had suggested a narrower 60/40 victory.
Macron’s election campaign called among other things for more integration with the European Union (E.U.), lowering corporate taxes to 25% from 33.3%, establishing a 50 billion euro ($54.3 billion) government investment plan, 120,000 government job cuts, and some leeway with the current mandatory 35-hour working week.
Le Pen wanted a referendum on France’s E.U. membership and to leave the Euro single currency, although she modified the latter policy during the latter stages of the campaign. Le Pen also wanted to maintain the 35-hour week, reduce taxes on the lower paid but higher tax on the better off, increase regulation, erect barriers to globalisation, lower the retirement age to 60, and tax the employment of foreign workers.
After the first round result narrowed the candidates down to 2, Citi Research said a Macron win would mean little change to the economic outlook. Unemployment and household confidence were the key drivers of French auto sales. A Macron win should have little influence over its 3.5% growth forecast for French auto sales in 2017.
A Macron win might not be good news for the Renault-Nissan alliance because of an apparent difference of opinion between Macron and CEO Carlos Ghosn, while the new president was a minister in the socialist administration.
Renault owns 44% of Nissan, which controls 15% of Renault.
Ghosn has said the further integration of the Renault-Nissan alliance won’t happen while the government retains its stake, and Macron has indicated he wouldn’t be a seller. But some experts believe Macron might change this and sell holdings in Renault and Peugeot to fund his plan to promote industrial and research with funds from selling some government industrial stakes.
Macron’s ability to implement his reforms depends now on the results of the parliamentary elections next month, according to the Wall Street Journal.
“Mr Macron’s ability to push reform will depend on the strength of the parliamentary coalition he can assemble. If En March fails to win a majority in June’s parliamentary vote, he should hope the Republicans do,” the Wall Street Journal said in an editorial.
The Republican candidate Francois Fillon had been favoured to win the presidency but fell foul of a nepotism controversy. His program of economic reform was much more free-market radical than Macron’s.
“One way to set the tone for the June vote would be to invite Republican heavyweights to join the Macron cabinet,” the newspaper said.