Regulatory Relations

The election victory of Emmanuel Macron as France’s president should see momentum behind projects such as the European banking union (EBU) and the capital markets union (CMU) given an extra boost. By Justin Pugsley

He is also looking to re-prioritise the ‘Franco-German’ partnership to shape EU and eurozone policy. Mr Macron is after all an ardent Europhile and a true believer in the European project. It is no wonder that many in the European Commission are delighted about his election victory, which goes beyond having managed to stop Marine Le Pen of the anti-EU National Front party from gaining power.

Having a French president committed to European unity should ensure programmes, such as CMU, EBU and greater eurozone integration are given more priority by France. He is also likely to be supportive of the European Commission’s efforts to keep order in the eurozone, such as bringing unruly Poland and Hungry into line.

Angela Merkel, the German chancellor, will no doubt find him a useful ally in trying to hold together the European project, though pushing for a common fiscal policy might be a step too far for countries such as Germany and the Netherlands.

The pan-EU deposit insurance scheme, envisaged as part of EBU, may also be out of the question, but Mr Macron will certainly give the initiative much more impetus than previous president Francois Hollande, who looked weak, lethargic and apathetic in his role.  

Hard Brexit more likely

However, for the UK and the City of London, Mr Macron’s victory may not be good news. He talked of pushing for a hard Brexit and believed states which choose to leave the EU should be punished and should not have access to the EU’s single market. All music to the ears of those in the European Commission and likely to find a sympathetic echo in the European Parliament, which must ratify any UK-EU deal. Comments from Jean Pisani-Ferry, who is close to Mr Macron, suggested on May 8 that the President would not seek to punish the UK and doesn't favour a hard Brexit -- but he would be "tough" in the negotiations. 

Therefore, there is still some confusion as to how France will react over Brexit, but one thing that won't change, is the demand for large sums of money from the UK.  

Meanwhile, Mr Macron, a former Rothschild banker, will be far more zealous than Mr Hollande in trying to attract financial business away from London to Paris and fintech firms are also likely to be heavily targeted. Expect the battle over euro-clearing to escalate dramatically in coming months. 

This all dovetails neatly with his regulatory objectives and in making France entrepreneur-friendly.

However, Mr Macron now has to deliver. His one-yea-old political party, En Marche!, needs to win seats in the June parliamentary elections and needs to bring meaningful change to France and reinvigorate its economy.

If he fails to deliver – and driving reform in France is far from easy, just ask former highly energetic president Nicolas Sarkozy – then France could end up with an anti-EU president come the next presidential elections in five years time.     

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