THE FRENCH ARE DETERMINED TO MAKE THEIR COUNTRY UNGOVERNABLE

“Let’s Be Ungovernable”

The Le Pen challenge of 2017 is dead. Emmanuel Macron will have no trouble erecting a ‘cordon sanitaire’ to keep her Front National at bay in round two of the French elections on May 7.

The existential threat hanging over Europe’s monetary union has for now been lifted. Markets have instantly pocketed the reprieve. The spread between French 10-year bonds and German Bunds has dropped to ‘pre-populism’ levels of just over 40 basis points.

The celebration may be short-lived. “France is going to be very difficult to govern,” observes Eric Dor from the IESEG school of management in Lille.  You can’t put it more mildly than that.

“The National Assembly [French Parliament] may be badly Balkanized and nobody knows whether Macron will have a working majority. The fear is that France could lose another five years,” he says.  Just five years?  How about forever?

Few dispute that Mr. Macron has pulled off a masterful stunt, rebranding himself as an outsider despite being the product of the elite École Nationale d’Administration, a former Rothschild Banker, and the protégé of the same Socialist grandees who have been running France since 2012.

He won 24% of the vote on a platform that essentially continues the policy agenda and Europeanist reflexes of the ‘Hollande II’ presidency – in its later reformist phase –  but he will have to lead a country in which over three quarters of the electorate voted for no such thing.

Assembling a tactical coalition to defeat Marine Le Pen on May 7 is the least of his problems.

France is fractured along deep lines of cleavage, over Europe, migrants, Islam, the size and role of the state, trade and the alleged depredations of “capitalisme sauvage”.

Some 48% voted for movements – from the hard-Left to the hard-Right – that fundamentally reject the EU as currently structured, with the sovereignty candidate Nicolas Dupont-Aignan winning 1.7m votes on a pure anti-EU ticket.

Five years ago the same constellation won just 30%. Those who claim that this election is a vindication of EU ideology are oddly blind to these undercurrents.

France is split in half. The East voted for Marine Le Pen, the West voted for Macron Credit: Les Echos

A further fifth voted for François Fillon’s Thatcherite purge of the bloated public sector, his Catholic conservatism, and his ‘Vercingetorix’ evocation of ancestral France.

“The divide between the new Macronite establishment and the unrepresented populists is likely to be a constant source of instability,” notes Jonathan Fenby, head of European Political Research at TS Lombard.

“The big GGT trade union is going to be more militant and will be out in the streets over any attempt to reform collective bargaining laws,” he says.

Mr. Fenby believes Mr. Macron should be able to push through his plan to cut the corporate tax rate from 33% to 25% (already on track to drop to 28% by 2020).

The real question is whether he can reshape the political landscape and build a coalition strong enough to deliver reforms that have stymied every other leader over the last twenty years, even those backed by disciplined party machines.

Mr. Macron’s infant party – En Marche – has few suitable candidates for the parliamentary elections in June. If it fights the Socialists in each constituency, it will split the centre-Left vote and open the door wider to a chaotic distribution of seats in the Assembly.

“The Socialists are going to defend themselves. They are the party of Jean Jaurès with a proud history. They are not going to let themselves be swallowed up by a 39-year old upstart,” says Mr. Fenby.

Gilles Moec from Bank of America says investor focus will now switch from day-to-day poll watching to the deeper question of what this election means for the future of monetary union.

“We think the survival of the euro area depends on the capacity for France and Germany to agree on a ‘second stage’ of the European construct, involving some form of fiscal union,” he says.

Mr. Macron aims to restore French credibility by pushing through labor reforms: Nordic ‘flexicurity’ rather than the pauperizing wage-compression methods of Germany’s Hartz IV agenda in 2003 and 2004.

The gamble is that this will unlock German consent for a eurozone finance ministry, debt pooling, a shared eurozone budget to buttress the European Central Bank. This makes very optimistic assumptions about German political culture, and overlooks severe constraints in the German constitution.

Europe’s bourses are euphoric about the Macron victory, for now at least Credit: Les Echos

The French people themselves are in any case torn over the EU, with Pew surveys suggesting that most wish to see powers devolved to Paris. Mr. Macron’s ardent embrace of the EU project is brave in the current circumstances, but he seems intent on trying to lever a constitutional revolution on a precariously thin electoral base.

The worry for Britain is that Mr. Macron sees the world through an ideological EU prism, coloring his view of Brexit.

When he visited London in February he told reporters that he would hold the UK’s feet to the fire, adopting a rigid Cartesian line on access to the EU’s single market and the European Court. “I take a classical view of what it means to be a member of the EU. I don’t want to accept any caveat or waiver,” he says.

While he professes to be against any ‘punishment’ of Britain, his body language can suggest otherwise. But whatever his inclinations, the likely reality is that he will be worn down trying to run a government in ‘cohabitation’ deals with prickly and fractious parties.

His British counterpart, by contrast, will be sitting on a colossal parliamentary majority, wielding the most disciplined executive in Europe. This should level the psychological playing field.

Or tip it decidedly towards Britain. Mr. Macron will soon find out he’ll have been elected the president of an ungovernable country.

Ambrose Evans-Pritchard is the International Business Editor of the London Telegraph.