London snatches the crown from Paris as Europe’s largest stock market after Emmanuel Macron’s snap election sends investors into a spin

It's been a turbulent week in France since President Emmanuel Macron suddenly announced snap elections and dissolved the National Assembly.

The news rocked the French stock markets, prompting the worst sell-off in two years. High-profile victims included BNP Paribas and Société Générale. Roughly $258 billion was erased from France’s market capitalization. Even the euro fell in response to Macron’s plan.

Those events have toppled Paris from its throne as Europe’s biggest stock market, paving the way for London to take the helm on Monday for the first time in nearly two years.

London Stock Exchange’s market cap stands at $3.18 trillion, just slightly above Euronext Paris’ at $3.13 trillion, Bloomberg reported. France’s CAC 40 Index, comprising the stock market’s biggest companies, has wiped out all its 2024 gains so far.

The U.K. could use the boost as it navigates a slowdown in IPOs and lingering macroeconomic uncertainties. The country once had a $1.5 trillion lead against the French capital in 2016, which has narrowed in recent years. The last time the country lost its prestigious position as the leading stock market to France, it was amid eye-popping inflation of 10.7% (now down to 2.3%) following political chaos under former Prime Minister Liz Truss.

Julia Hoggett, chief executive officer of London Stock Exchange Plc, speaks during The Power of Action: LGBTQIA+ Inclusion event panel discussion at Bloomberg LP's European headquarters in London, UK, on Thursday, June 22, 2023. Young people across England and Wales are more than twice as likely to identify as lesbian, gay, bisexual or another sexual orientation as the rest of the population, according to UK 2021 census data that for the first time reveal the makeup of sexual orientation. Photographer: Hollie Adams/Bloomberg via Getty Images

The news came as the LSE’s CEO Julia Hoggett was named a Dame in the King’s Birthday Honours list. Commenting on the recognition, Hogett said in a statement:

“Whilst I recognise that this is an individual honour, I feel it is very much for the team of people at the London Stock Exchange who do such remarkable work to support the companies, investors and intermediaries in our markets.”

The U.K. markets, rich with oil and mining companies, were more exposed to the volatility of economic forces during the pandemic. At the same time, Paris was gaining ground with the rise of luxury giants like LVMH and Hermès owing to pandemic-fueled spending.

This confluence of events ultimately pushed London below Paris in its ranking as Europe’s most valuable stock market—until political chaos in France propped it back up again.

The rivalry between the two financial centers has been long-running. For instance, London lost its top spot as home to the most Fortune Global 500 companies last year. Surprise, surprise: Paris rose to beat the British capital.

London has also suffered other blows to its reputation as a business hub, with Cambridge-based semiconductor company Arm Holdings choosing to list in New York instead. Still, IPO and merger activity are picking up, which helps bolster the LSE’s position. Raspberry Pi, a personal computer company, recently launched its IPO, and its shares soared over 50% in less than a week, making it one of London’s best-performing tech listings in recent memory.

France’s political problem

At the recent European Parliamentary elections, the rise of the right-wing vote clearly indicated the popularity of President Macron’s competitor, Marine Le Pen, in France.

If Le Pen’s Euroskeptic National Rally (NR) party ascends to power, it could mean a broader shift in parliamentary power and French politics. For the markets, that means more expensive France-centric policies, driving up spending and national debt, which have been piling up on a rickety financial system.

As a result, French government bonds saw their risk premiums shoot up to the highest since 2017. The difference between these and the benchmark German bonds reflects the premium investors demand to hold French government bonds, given the risk attached to them.

Bruno Le Maire, France’s finance minister, warned last week that the country “would face guaranteed economic collapse” if parties on the extreme right or left rose to power. He also warned that if Le Pen is elected, France could face a Truss-style debt crisis, sparked by a slew of proposed unfunded tax cuts that led to a bond sell-off in the U.K.

Whatever happens, France will have an eventful few weeks in the lead-up to the elections, due to be held on June 30 and July 7.

This story was originally featured on Fortune.com