Europe’s third biggest economy has suffered years of anemic growth, high unemployment and budget deficits, while neighbors such as Germany and the UK have enjoyed a stronger recovery from the global financial crisis.
France’s economic malaise is a major issue in presidential elections. Before voting began Sunday, the contest had narrowed to a four-way race between candidates from across the political spectrum. Two of them—far right politician Marine Le Pen and socialist Jean-Luc Melenchon proposed radical ideas on how to improve the economy. Both oppose free trade agreements and are highly critical of the euro, MarketPlus reported.
Melenchon crashed out in Sunday’s vote but Le Pen came second and now faces centrist reformer Emmanuel Macron in the run-off. But will either of them have the right prescription to cure France?
After years of slow growth, the country’s GDP figures are finally turning higher. But they remain at very low levels.
The French economy expanded by 1.2% in 2016, according to the International Monetary Fund. The two larger economies in Europe—Germany and the UK—posted growth of 1.8% over the same period.
Markets, Euro Soar
Europe’s stock markets soared on Monday on the news that Macron was out in front in the French presidential race. The euro also surged.
Experts commented that Macron is already the next French president so far as the markets are concerned. And they heaved a sigh of relief that he scored higher than the National Front’s Marine Le Pen, whose protectionism and Euroscepticism are unpopular in financial circles.
The Paris Cac 40 index shot up 4.1% to 5,267.88 points. Frankfurt’s Dax 30 jumped 2% to 12,296.56 and London’s FTSE 100 won 1.4% to 7,211.78. Madrid’s Ibex 35 index rallied 3.5% to 10,734.4 points at the start compared with Friday’s close.
Banks’ shares were the big winners, with France’s BNP Paribas, Societe Generale and Credit Agricole gaining 8% at start of trading.
Britain’s Barclays, Italy’s Unicredit and Germany’s Deutsche Bank also saw their shares rise.
The European currency rose to $1.09 at one point, settling at $1.084 compared to $1.072 in New York on Friday.
Macron, a former banker, fiercely defended the EU during presidential debates and proposes to ease taxes on business and cut public-sector jobs and spending.
