The result of the first round of voting in the French presidential election pits centrist, pro-European Emmanuel Macron against the hard right, eurosceptic Marine Le Pen.
Macron is expected to win the second round comfortably, with most polls suggesting that he will win by roughly 60:40 and betting markets giving him a 90 per cent chance victory.
This has implications for the euro, the EU and Brexit.
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First of all, the short- and medium-term prospects for stability in the Eurozone are greatly strengthened, because not only is Macron the most pro-euro and pro-EU of the three plausible candidates likely to have faced Le Pen, polls suggest he is also the most likely to beat her in the second round.
Run-offs with Francois Fillon and Jean-Luc Melenchon were expected to be closer, and while Fillon supported membership of the euro, Melenchon supported Frexit. One hostile candidate is through to the second round, but the likelihood of a hostile candidate winning is now vanishingly small.
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This news immediately sent the euro soaring against the dollar to its highest level this year. The pound rose by 0.3 per cent rise against the dollar yesterday, and the euro jumped by 1.8 per cent. The markets want stability and the election of an unashamedly pro-European president has given them that stability. Macron advocates further integration on issues such as a Eurozone parliament and an EU border agency. These would strengthen the Eurozone and increase the viability of the EU.
In Brussels, a Macron win will be interpreted as an affirmation of support for the European Union. Forget the fact that support for ‘Frexit’ candidates exceeded 40 per cent (and not forgetting the one-in-five voters who supported Fillon), the European establishment will read this as an endorsement of the status quo.
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EU leaders will feel emboldened by their electoral vindication against Melenchon and then Le Pen. And, in turn, they will see less need to embark on much-needed EU reform. This is a pity, but the European project has never embraced flexibility, and it needs to for its long-term success.
But what does it mean for Brexit? Counterintuitively, a Macron win is good for Britain. Following Norbert Hofer’s defeat in the Austrian presidential election, Geert Wilders’ failure to top the polls in the Netherlands and Le Pen’s (likely) defeat, populism is being interpreted as an interesting Anglo-Saxon phenomena in 2016, which failed to cross the channel/Atlantic to the continent in 2017.
This will quell the fears that the Brexit vote would trigger a series of exit votes in other member states.
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If Brexit is interpreted as a consequence of British exceptionalism – a jolt from a country that was never as comfortable or suited to EU membership as the rest – why “punish” the UK to set an example to the rest?
Counterintuitively, the French electorate might just have laid the foundations for a simpler Brexit, by creating an EU establishment less rattled by the Brits than they were nine months ago.