Macron Calls French Legislative Election After Far-Right Win

(Bloomberg) -- Voters in France and Germany dealt a massive blow to their leaders in European Parliament elections Sunday, leading Emmanuel Macron to take the extreme decision to call a snap legislative ballot, which has the potential to throw the country into political chaos just as it’s set to host the Olympics.

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Marine Le Pen’s National Rally won 32% support — in line with expectations — while Macron’s Renaissance party trailed with 15%, according to an estimate published Sunday by Ifop. The new election in the National Assembly would be for French lawmakers, which doesn’t affect who is president, meaning Macron’s position is not in question.

The euro fell as much as 0.3% to $1.0766 in early trading, its weakest in almost a month and under-performing its major developed peers. The move pares an almost 2% rally in the euro since mid-April as traders tempered bets of European Central Bank rate cuts this year.

In Germany, Chancellor Olaf Scholz’s Social Democrats crashed to their worst-ever result, falling behind both the opposition conservatives and far-right Alternative for Germany. Macron’s warnings about the rise of authoritarianism and appeal for European unity in the run-up to the vote failed to boost his result as concerns about inflation, security and immigration boosted nationalist support.

“I can’t pretend nothing has happened,” Macron said in a televised address Sunday night. “The challenges we face — be they external dangers, climate change and its consequences or threats to our unity — demand clarity in our debates, ambition for the country and respect for each and every French citizen.”

Around 360 million people in the European Union were eligible to vote in the European election, which will decide the 720 lawmakers in the parliament for the next five years. The assembly has limited powers, including adopting and amending EU legislative proposals and, importantly, voting on who will become the next European Commission president.

Ahead of the vote, Macron presented the European election as an existential fight for the continent and pivotal for Ukraine’s battle against Vladimir Putin. Now, he’s shifted the focus to France, where the first round of the new legislative election will be held on June 30, with a second round on July 7.

Macron’s decision means France will hold its first snap parliamentary election in more than a quarter century. The last time came in 1997, when then-president Jacques Chirac called early elections even though his party and its allies had a majority in parliament.

In an address to supporters of her National Rally party, Le Pen said Sunday’s result was also aimed at the EU and was part of a “return of nations” all over the world. “Tonight’s message, including that of the dissolution of the assembly, is also directed at the leaders in Brussels,” she said. “It closes this painful, globalist interlude, which has caused so much suffering for people in the world.”

The vote for Le Pen’s party, while dominant, was in line with French election polls taken in the weeks and months before Sunday’s vote. Macron’s decision, though, pushes this from being a warning by voters on the makeup of a body with limited powers — the European Parliament - to a potential explosion in the heart of one of the EU’s founding countries.

If the National Rally and other hard-right parties were to repeat their performance in French parliamentary elections, Macron could be forced to name a prime minister with fundamentally different policy views.

While the fallout in Germany has been less dramatic, at least so far, voters there punished all three of the parties in Scholz’s ruling coalition, with the Greens in particular losing ground compared with the previous EU election in 2019. Senior members of the opposition Christian Democrats questioned whether the chancellor retained the authority to lead the country and urged him to submit to a confidence vote in parliament.

The conservative CDU/CSU alliance was on course for a comfortable win with 30%, with the AfD second at 16% and the SPD with 14%, according to projections from public broadcaster ARD. The other two parties in Scholz’s ruling alliance — the Greens and the Free Democrats — also fared badly, getting 12% and 5% respectively.

In the Italian vote, Prime Minister Giorgia Meloni’s right-wing Brothers of Italy’s party was on course to win, according to a local poll, with the party expected to gain 27% to 31% compared to just over 6% in 2019. The left-wing Democratic Party got 21.5% to 25.5% of the vote.

Matteo Salvini’s League and Antonio Tajani’s Forza Italia, founded by the late Silvio Berlusconi, both coalition partners in Meloni’s government, were projected to gain just under 10%.

In the European Parliament vote, Commission President Ursula von der Leyen’s center-right European People’s Party is set to win, according to the first projection for the formation of the European Parliament, giving it and the Socialists & Democrats and Liberals a combined 398 seats out of 720. The far-right European Conservatives and Reformists, along with the Identity and Democracy grouping, will have 133 seats together. The Greens were slated to drop to 53 seats from 71.

The projection is based off national estimates from 11 countries and pre-election polls for the rest.

The tilt to the right in the parliament spells bickering over the EU’s ambitious climate agenda at a time when the Green Deal needs to move from policy papers to reality in homes and companies. Even if climate change remains one of the most important issues for Europeans, footing the bill for the transition became a major concern for voters, whose wallets were hit by an unprecedented energy crisis.

The challenge for the next European Commission, which will be formed after the vote, and the 27 member states, will be to find more funding for protecting the most vulnerable and boosting the competitiveness of companies subject to ever-stricter pollution goals as other pressures mount. Many member states want to boost defense spending amid a worsening geopolitical environment following Russia’s invasion of Ukraine.

Beyond Le Pen’s party, Macron pointed to a broader rise in the French vote for far-right movements that reached nearly 40% in Sunday’s vote as the reason for his action. “As someone who has always believed that a united, strong, independent Europe is good for France, I cannot accept this situation,” Macron said. “The rise of nationalists and demagogues is a danger not only for our nation, but also for our Europe, and for France’s place in Europe and the world.”

--With assistance from Ewa Krukowska, Megan Howard, Katharina Rosskopf, Piotr Skolimowski, Jorge Valero, Andrea Palasciano, John Ainger, Alan Katz, Zoe Schneeweiss, Matthew Burgess and Lyubov Pronina.

(Updates with markets in the third paragraph and Italian results.)

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