LONDON — Emmanuel Macron, the 39-year-old former investment banker and self-proclaimed reformer with a pro-European, pro-business agenda, may have stolen the French presidential election with promises of reform, but will he deliver?
That’s just what business leaders and financial analysts were asking the morning after Macron’s win over far-right leader Marine Le Pen, with 66.1 percent of votes cast in a second election round on Sunday.
He’s promised much, ramped up the charm, and managed to nab France’s top government job in a matter of months, but many would agree it’s all uphill from there: Macron still has to build a host of political alliances and hope that France’s National Assembly elections hand him the majority he needs to be a strong leader.
“There are still a lot of balls in the air. Let’s wait and see who will win the National Assembly elections, and what his government looks like,” said the fashion and luxury investor Robert Bensoussan. The elections will take place on June 11 and 18, and their outcome will influence Macron’s choice of prime minister. “Macron still hasn’t explained how he’s going to lower unemployment, create jobs and get France out of the gloom. He hasn’t voiced a real program, and he may just be a continuation of (outgoing president) François Hollande, although I hope he does something different.”
Adrian Joffe, Comme des Garçons president and chief executive officer of Dover Street Market, said he’s thrilled about Macron. “I’ve been wanting him to win since the day he announced his candidature. I like his story, his look, the way he speaks and most of all the hope and vision he brings to France. I suddenly feel happy again to be in living in Paris,” he said.
On Instagram, the London-based photographer, filmmaker and media entrepreneur Nick Knight congratulated the French on their new “pro-Europe president and for overwhelmingly rejecting the fear mongering and popular nationalism of the far right. I only hope we do the same here when we have our chance.” He closed with the hashtag “Remain,” signaling the side he took in Britain’s EU referendum last summer.
“We are all so happy,” Karl Lagerfeld told WWD on Sunday after Macron had been declared the victor. “I know him and his wife very well. They are great people.” Referring to Le Pen, he added: “With this terrible woman, it would have been the end of Europe.”
London’s Evening Standard, now edited by Britain’s former Chancellor of the Exchequer George Osborne, pointed out that Macron’s success is far from assured, with the novice politician sure to face resistance from unions and other reactionary forces as he seeks to overhaul labor laws, the welfare system, and boost France’s competitiveness.
The paper also expressed relief that he beat Le Pen, and called Macron’s victory “a victory for moderation. It shows how the center can hold.” Fellow Europeans agreed. Angelino Alfano, Italy’s minister of foreign affairs, said a toast was in order for France and for “those who believe in the Europe of freedom, safety, free trade and solidarity.”
The big banks in particular were relieved, as Le Pen was decidedly anti-euro and anti-EU, and her victory would have had dire consequences for the future of the European Union.
“Political risk is averted, at least for the moment,” said Luca Solca, managing partner at Exane BNP Paribas. “Macron is indeed the option financial markets were expecting, and discounting, already. It should be good for the sector. After all, (Bernard) Arnault was vocally for him.”
Although both LVMH Moët Hennessy Louis Vuitton and Kering declined to comment on the election result Monday, Arnault voiced his support for Macron in an op-ed piece in Les Echos newspaper last week.
The chairman and ceo of LVMH described Le Pen’s platform as a “dead branch,” and cautioned that protectionism was not the solution to the economic and political turmoil roiling the world today.
Arnault described Macron’s program as a path of “hope and reason,” noting that it was built on the conviction that the private sector is key to job creation.
“I share this founding conviction without reserve: A company that is not hindered in its development, that is not thwarted from its growth path by unreasonable taxation or a cumbersome bureaucracy, has no other project but to invest, innovate and create sustainable employment,” said the executive.
On Monday, Europe’s major markets, which had already forecasted a Macron win, ended the day much in the way they started it – shrugging off the victory. The CAC 40 in Paris retreated further, closing down 0.9 percent at 5,382.95.
While the euro reached a high of $1.10 in the early hours of the day, it fell back 0.35 percent to $1.09 a few hours later.
Like Arnault, financial analysts have embraced Macron’s talk of reform. The president-elect has said he wants to slash the corporate tax rate from 33 to 25 percent, reform the 35-hour working week and slash taxes and public sector jobs.
In a flash report on Monday, Credit Suisse said that despite all the unknowns, investors in France should focus on the reform program proposed by Macron and his movement En Marche. Macron wants to get France, mired for decades in a socialist system that stymies growth and discourages entrepreneurial businesses, moving again.
“We believe that the market-friendly nature of Macron’s labor market, corporate taxation, investment and pro-European reforms should start to inform more forcefully investors’ decisions on their positions in France and, more generally, in the euro area,” the report said.
According to a UBS report issued a few days prior to the election, Macron’s proposed structural reforms in the area of labor market flexibility and taxation “could go some way to help lift French growth potential again.” The bank pointed out that France’s GDP growth rate was actually above Germany’s before 2008.
“Economic issues related to the labor market and their own income situation dominate voters’ minds,” UBS continued. “Globalization and concerns about Europe lag well behind.”
Macron may not have made any moves yet, but his policies have already buoyed French financial dealmakers.
On Monday, Britain’s Daily Telegraph reported that members of the French financial industry had already seized on the “Macron effect” in the run-up to the election.
The conservative daily paper said French officials have been feverishly “crisscrossing London over recent days, meeting sovereign wealth funds and bankers from the U.S., Japan, China and other countries, selling the promise of a reformist revolution in France.”
Paris was already a top target for London-based banks looking to transfer their businesses abroad if the U.K. fails to strike a favorable Brexit deal.
What has given them pause for thought, however, are France’s famously inflexible labor laws, powerful unions, and tight fiscal regulations. Given Macron’s beliefs, that could well change — much to the U.K.’s disadvantage.
The French wooing of British-based businesses isn’t just happening in finance but in fashion, too.
Last month, British Fashion Council chief executive Caroline Rush testified in front of a parliamentary committee hearing about the impact of Brexit on fashion and the creative industries. Although she didn’t name names, it’s clear that Britain’s continental rivals are already pouncing on the potential weaknesses related to Brexit.
“We are hearing from our counterparts in other European cities the rhetoric that ‘London is closing, its position is lessening, the financial power is going, the access is limited.’ It’s really important that in the next two years that we push this message that (London) is open and international,” Rush told parliamentarians.
As for Brexit, Macron’s economic adviser Jean Pisani-Ferry said negotiations between the U.K. and the EU will be tough. He told BBC Radio 4’s Today Programme that Macron will be a “tough and demanding partner,” but there were “certainly not” any plans to punish the U.K. for leaving the bloc.
George Wallace, ceo of MHE Europe, the retail consultancy, said Macron’s victory could make British Prime Minister Theresa May’s negotiations with the EU slightly more difficult.
“His victory strengthens the Brussels brand, and it could be that France and Germany gang up on the U.K., although these negotiations are going to be so difficult anyway, I don’t think Macron will make a huge amount of difference.”