rbc french elections

8/2/2019 RBC French Elections

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French elections

Hollande looks set to become the next FrenchPresident, but will he be able to govern?Summary: French voters will go to the polls for the second round of the Presidential

elections on Sunday. After a long televised debate between the candidates, Franois

Hollande is still 6-8 points ahead and looks set to defeat incumbent President Sarkozy.

Legislative elections will follow in June, and past electoral history suggests two broad

conclusions: (i) first-round supporters of right-wing candidate Le Pen and centrist

candidate Bayrou are likely to migrate to the main centre-left and centre-right parties;

and (ii) supporters of the far-left tend to be more faithful. This means that a

prospective Hollande presidency is likely to require the far-lefts support to gain a

parliamentary majority and that the risk of cohabitation (where the parliamentary

majority is from a different political party than the president) is real.

Exhibit 1 shows the results of French electoral history over the past quarter-century (i.e. since

the far-right party entered the mainstream). The following conclusions can be drawn:

First-round success does not signal success in the legislative election

In 2007, centrist candidate Bayrou 2007 got 19% of the popular vote, but just 3 seats inparliament, as his voters migrated to support President Sarkozys centre-right orchallenger Royals centre-left. Mr Le Pen famously made it to the second-round of the

Presidential elections in 2002, but gained no seats in the Assembly.

The far-right will struggle to make it into parliament

In the legislative elections, the more 'mainstream' centre-left Socialist Party and centre-right UMP tend to gain votes from the far right (and to a lesser extent from the centre). In

2002, those who voted for the far-right and other smaller parties mostly voted for the

centre-right party in the legislative elections, while the centre-left gained seats fromsmaller parties in the centre and the left. In 2007, a similar thing happened with the

centre-right but the centrist votes were more evenly split between Mr Sarkozy and Mrs

Royal. The far-right Front National has managed to win a maximum of one seat in the

Assembly, despite gaining 10-18% of votes during the Presidential elections.

The far-left voter base is more faithful

In contrast, the far left tends to keep a more constant proportion of seats to its votesreceived in the first round. This could mean Mr Mlenchon's PCF party gaining over 60

seats, which would be its best result since 1978. In the event of a Hollande Presidential

victory, this would likely mean that Hollande's government would depend heavily on the

PCF's support and thus his policies could take a step further towards the left.

The risk of cohabitation is real

Although Ms Le Pen's supporters won't necessarily support Mr Sarkozy in thePresidential election, the outcomes in 2002 and 2007 suggest that those votes end up wit

the centre-right party at the legislative elections. That could give Mr Sarkozys party

about 260 seats, not too far from the 289 needed for a majority. Given the high rejection

rate of Sarkozy, a leadership change for the party (if he loses Sundays election) could

provide that boost. Thus, based on this year's first round votes (which again, are no signa

for success), the deciding factor for which party is able to form a government could

swing on the direction Mr Bayrou's centrist supporters move. He has pledged to support

Mr Hollande in the presidential run-off, signifying that he would help Mr Hollande form

a government if there were sufficient seats in the left and centre to achieve this.

RBC Europe Limited

Gustavo BagattiniEuropean Economist+44 (0) 20 7029 [email protected]

May 4, 2012

This report is priced as of marketclose November 21, 2011 EST.

All values in EUR unless otherwise

stated.

For Required Conflicts Disclosures, please see page 3


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Exhibit 1: Some lessons from recent French elections

1988: The centre-left wins the Presidency and forms a coalitionwith the far-left. The far-right under Le Pen and other smallerparties lose votes to the more established centre-left, centre andcentre-right parties.

Candidate % R1 % R2 Proj. Seats (diff.)

PCF/FDG (far left) Lajoinie 6.8 39 27 -12

PS (centre-left) Mitterrand 34.1 54.0 196 260 64

Left coalition others 0 16 16

UDF/MoDem (centre) Barre 16.5 95 129 34

RPR/UMP (centre-right) Chirac 20.0 46.0 115 126 11

Right coalition others 0 16 16

FN (far right) J-M Le Pen 14.4 83 1 -82

Other 8.3 47 0 -47

Pres. Parl.

1988 election

1993-97: The centre and centre-right won back Parliament in1993, and co-habited with Mitterrand until 1995. Two years later,the left regained Parliament, and the Chirac-Jospin cohabitationperiod lasted until 2002.

1993

Parl.

Seats Candidate % R1 % R2 Proj. Seats (diff.)

PCF/FDG (far left) 24 Hue 8.7 50 35 -15

PS (centre-left) 53 Jospin 23.3 47.4 134 255 121

Left coalition others 14 3.3 19 30 11

UDF/MoDem (centre) 207 Balladur 18.6 107 112 5

RPR/UMP (centre-right) 242 Chirac 20.8 52.6 120 139 19

Right coalition others 36 4.7 27 2 -25

FN (far right) 1 J-M Le Pen 15.0 87 1 -86

Other 0 5.6 32 3 -29

1995 1997

Pres. Parl.

2002: The far right made it to the second round of thePresidential elections, but did not gain a single seat inparliament, as Chirac swept votes from other centre-rightparties and from the far-right


PCF/FDG (far left) Hue 3.4 19 21 2

PS (centre-left) Jospin 16.2 93 140 47

Left coalition others 7.6 44 16 -28

UDF/MoDem (centre) Bayrou 6.8 39 29 -10

RPR/UMP (centre-right) Chirac 19.9 82.2 115 357 242

Right coalition others 3.9 23 13 -10

FN (far right) J-M Le Pen 16.9 17.8 97 0 -97

Other 25.4 147 1 -146

2002 election

Parl.Pres.

2007: Sarkozy won the Presidential election by 6 points, thenmade gains with both the far-right and the centre, taking manyseats from Mr Bayrous centrist partya


PCF/FDG (far left) Buffet 1.9 11 15 4

PS (centre-left) Royal 25.9 46.9 149 186 37

Left coalition others 1.6 9 26 17

UDF/MoDem (centre) Bayrou 18.6 107 3 -104

RPR/UMP (centre-right) Sarkozy 31.2 53.1 180 313 133

Right coalition others 2.2 13 32 19

FN (far right) J-M Le Pen 10.4 60 0 -60

Other 8.2 47 2 -45

Parl.

2007 election

Pres.

Presidential winner and coalition majority shaded. Proj. is a projection of parliamentary seats based on the 1 st round voting in the presidentialelections. Diff. is the difference between the actual seats won and those projected.

Source: RBC Capital Markets.

Exhibit 2: In 2012, Hollande is projected to win the Presidency by about 6 points, but a parliamentarymajority would require support from the far-left and the centre

Legislative

Candidate % R1 % R2 Projected

PCF/FDG (far left) Mlenchon 11.1 64

PS (centre-left) Hollande 28.6 53.1 165

Left coalition others 2.3 13

UDF/MoDem (centre) Bayrou 9.1 53

RPR/UMP (centre-right) Sarkozy 27.2 46.9 157

Right coalition others 0FN (far right) M Le Pen 17.9 103

Other 3.8 22

2012 election

Presidential

Projected president and coalition majority shaded in pink. The projected column is a simple projection ofparliamentary seats based on the 1st round voting in the presidential elections.

Source: RBC Capital Markets.

French elections: If Hollande wins, will he be able to governMay 4, 2012


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