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Earlier this month, Marine Le Pen officially launched her presidential campaign in France by vowing to fight back against globalization and securing France’s borders. The leader of the far-right Front National party plans to accomplish this by holding a referendum for exiting the European Union (EU), scrapping the euro and restricting immigration. With the United Kingdom on its way out of the single market, few people believe the pan-European project can survive without France.

“The division is no longer between the right and the left, but between patriots and globalization,” Le Pen told supporters last week.

Le Pen’s ultra-nationalist, anti-globalization message has been gaining support as France continues to struggle with modest economic growth and an influx of refugees from the Middle East. The French economy has expanded in five of the last six quarters, but growth remains weak and inconsistent. The economy is forecast to grow just 1.3% in 2017, according to revised estimates from the International Monetary Fund (IMF).[1]

A slew of terrorist attacks by Islamic State militants has also brought Le Pen’s fight against “Islamic fundamentalism” to the forefront. For months, polls have shown that Le Pen’s views are resonating with voters. A recent IFOP (L’institut Français d’Opinion Publique) survey puts Le Pen in the lead with around 25% of the vote in the first ballot of the two-round system.[2]

Le Pen has not shied away from expressing the view that France should have a national currency that works alongside the euro as a common currency. While it is unclear how this system would work, having two currencies in circulation would allow France to safeguard against sharp fluctuations in the euro. Beyond that, the ultra-nationalist leader has long pushed to leave Brussels behind, a move that could undermine what little is left of EU integration.

“The French want less Europe and more France,” Le Pen said in an interview earlier this year. She has promised to pursue a Brexit-style referendum on the EU within six months of coming to power.[3]

Analysts say the impact of a so-called ‘Frexit’ could be swift and painful, rattling investor confidence and creating a fog of uncertainty for the French and European economies. Following the UK’s decision to quit the EU last year, investors have a better sense of what to expect should France follow suit.

Brexit triggered the biggest stock market selloff in history, with a staggering $3 trillion in paper losses, recorded mere days after the June 23 plebiscite.[4] Although the market recovered, uncertainty about the UK’s path out of the single market remains a focal point.

The UK’s decision to leave the EU has also created permanent damage to the British pound, which is currently trading at 31-year lows versus the dollar. At its lowest, sterling plunged to 168-year lows against a basket of other major currencies.[5] This leads many to believe that the euro could suffer a similar fate as the British pound if Le Pen were to be elected next president of France and lead the country out of the EU.

Despite the potential economic downside of Brexit, the vote has actually strengthened Le Pen’s case by bringing Euroscepticism to the forefront and by reminding voters that an exit is a viable outcome. A poll conducted by the Pew Research Center last year showed that more than 60% of French citizens hold a negative view of the EU. That was more than the 48% found in the United Kingdom.[6]

Like Brexit, a vote for Le Pen this spring could potentially trigger heavy volatility in the global financial markets, eroding confidence in the euro and driving investors into the safety of precious metals. Although the market may very well recover, uncertainty about France’s political future, and the very foundation of the EU, will continue to undermine investor confidence.

The first round of the 2017 French presidential election will take place on April 23, with a runoff election between the top two candidates scheduled for May 7.


[1] International Monetary Fund (January 2017). World Economic Outlook Update: A Shifting Global Economic Landscape.

[2] Sarah Wildman (February 6, 2017). “Marine Le Pen, the far-right politician topping the French polls, is thirsting for Frexit.” VOX.

[3] Will Kirby (January 4, 2017). “Marine Le Pen pushes for French currency after ‘Frexit’ but wants EU to KEEP the Euro.” Express UK.

[4] Matt Egan (June 28, 2016). “Brexit crash wiped out a record $3 trillion. Now what?” CNN Money.

[5] Mehreen Khan (October 12, 2016). “Pound slumps to 168-year low.” Financial Times.

[6] Riccardo Dugulin (June 24, 2016). “After Brexit, Frexit? The UK vote’s effect on French politics.” Global Risk Insights.

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