Fitch's France comment: Sudden election decision increases uncertainty

Fitch Ratings, an international credit rating agency, reported that French President Emmanuel Macron’s sudden election decision has increased uncertainty around the country’s path to fiscal consolidation and the prospects for further economic reforms. Fitch commented that the sudden election decision in France has increased uncertainty. In a statement made by Fitch, it was recalled that the president dissolved the National Assembly after the far-right National Rally Party (RN) received approximately 32 percent of the votes in the European Parliament (EP) elections, more than twice as many as Macron’s party Renaissance. The statement indicated that the snap decision would lead to early elections from June 30 to July 7, and that the election result would affect the scope of fiscal consolidation measures and increase difficulties in policy implementation. The statement emphasized that the sudden election call increased uncertainty about policy settings, and that “If no party wins an absolute majority, it is unclear what a possible coalition government would look like and how stable it would be.” It was pointed out that structural difficulties could hinder structural reforms It was stated that policy-making could become complicated if the president and prime minister were from opposing parties, and that it was unclear whether the RN’s strong performance in the EP elections would translate into a local legislative majority. However, it was noted in the statement that recent polls showed that the RN could emerge as the largest party, which could allow it to take a leading role in government for the first time. It was recalled in the statement that the RN did not present a detailed fiscal program, but advocated tax cuts and a more progressive tax system, and also called for measures to protect French companies from global competition. It was pointed out in the statement that political difficulties in the country could also hinder structural reforms.