Yahoo Finance Jim Armitage: Our glass is half full as France rejects the Right
Vive la France! the markets declared today. And rightly so. The prospect of a centrist Europhile in the Élysée Palace is as good an outcome from the French elections as investors could have wished for.
If, and it’s a big if, Emmanuel Macron builds a strong enough government to push through his reforms, Europe should enjoy a healthy extension to what is already its longest run of growth since the financial crisis. While he’s remained scant on details of his liberalising plans, the aim is to make it cheaper to hire and fire and bring down France’s stubbornly high unemployment.
Whether he’ll succeed in this notoriously unreformable country is doubtful, but his commitment to the EU brings much-needed stability to the whole of the bloc, and its economy. France’s “non” to the Eurosceptic far-right may even stem the anti-EU tide in Italy.
The momentum behind a break-up of the EU, started in the ballot boxes of Britain’s provinces, has been checked, for now.
For the City’s trading floors, that means Europe is “risk on”: worth a bet. Citi and Goldman Sachs today urged investors to back French and even Italian banks.
But where does it all leave Britain?
The FTSE 100, reflecting overseas-skewed multinationals, leapt nearly 2% today. The FTSE 250, made up of smaller, more UK-dependent enterprises, gained only 0.9%. That tells you investors reckon Macron will be good for the world, but perhaps less so for Britain. As Panmure Gordon notes, a stronger France dents Britain’s safe-haven status.
On the whole, though, we should look at this glass of vin rouge as half full, rather than half empty.
Despite Brexiteers’ excitement at trade deals with New Zealand and elsewhere, the EU will always be our biggest commercial partner, even after we leave it.
Economic growth and stability there is our best hope of limiting the self-inflicted Brexit damage. Macron was our best hope for that. So, santé, Emmanuel.
