Bankers, investors and businesspeople surveying the surge of the far left in France’s parliamentary election feel understandable alarm.
The Nouveau Front Populaire alliance that won the most seats in the National Assembly and is in pole position to lead any coalition government is a broad church including traditional Socialists and Greens. But its largest and leading party is La France Insoumise, the hard left group led by Jean-Luc Mélenchon.
As a result, the NFP has a radical programme that raises hairs on the back of capital markets specialists’ necks.
France’s economic renaissance is at risk, as Berenberg researchers put it. Since 2017, under Macron, employment has grown nearly 10%, trouncing Germany’s 4%.
The cost has been a ballooning budget deficit of 5.5%. Now the NFP wants to increase spending by €150bn, which could push it to 10%. Reforms such as raising the retirement age would be rolled back.
To the extent any of the spending will be covered by revenue, rather than more borrowing, this is to come from heavy tax increases, such as a 90% levy on personal incomes above €400,000. These policies could damp growth and fuel inflation.
As GlobalCapital reports this week, banks and investment firms are not making any hasty changes to their plans to operate and expand in Paris. But they are watching the situation with concern.
Some market participants have wondered if they would prefer the programme of Marine Le Pen’s far right Rassemblement National. Although nationalist, fiscally expansive and hardly pro-business, the RN is not threatening such swingeing tax and spending increases.
Capital markets players are likely to face a similar soul-searching in Germany in September, when regional elections look set to bring strong gains for the extreme right Alternative für Deutschland in several eastern Länder.
But for financial firms to let themselves be seduced by the far right would be a terrible mistake.
As big business learnt in the 1920s and 1930s ― when in several European countries it preferred fascist leaders promising stability and support for capitalism to unstable coalitions and left wing radicals ― this can be a fatal bargain.
The far right parties of today, like those of the pre-war years, have nothing to offer except division. They feed on and encourage the most negative human instincts of tribalism and selfishness. Since we so easily fall prey to these emotions, these opportunists have an easy task.
The logical result and explicit aim of these parties is to raise anger and hostility between groups in society, especially religious and ethnic communities, and between countries. They are also often hostile to sexual minorities.
That programme is completely contrary to the values that banks, investment firms and companies now profess to uphold. It can only end in disaster, for the economy, for business and for individuals’ livelihoods and freedoms.
Any person or organisation which values liberty and peace must oppose the far right.
Millions in French and other societies have come together to do the same (pictured).
Punitive taxes and restrictive regulations from the left may be damaging, but ultimately their aim is social solidarity. Financial professionals know well they are among the luckier citizens. Sometimes, they have to give a little.
If these policies harm the economy, they can be changed when the political wind turns. And after all, it's only money.
But if the right destroys social cohesion and international trust, no legislation will be able to bring them back.
Ducking a sucker punch from the left is one thing, but don't walk into a knockout blow from the right.