With the recent victory of Former Prime Minister François Fillon on the right-wing of the French political spectrum, an HSBC report speculates that France might just buck the global populist trend and reject Marine Le Pen, but importantly notes that “of course, polls have been unreliable.”

Marine Le Pen's niece and also an influential leader of Front National - Photo by Remi Noyon
Marine Le Pen’s niece and also an influential leader of Front National – Photo by Remi Noyon

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Fillon in surprise win

After besting both Alain Marie Juppé and former President Nicolas Sarkozy, somewhat of a surprise, Fillon now waits to see if former President François Hollande of the socialist party or centre-party candidate François Bayrou enters the race. Polls had not indicated Fillon would win the November 20 first round of primaries, but he did. One exit poll indicated that 53% of voters made up their mind to vote for Fillon just before the election.

“It is highly unusual for a French politician to experience such a late surge in popularity and it impossible to know whether this is a new phenomenon in French politics or simply a one-off,” the HSBC report from Olivier Vigna, French economist, and Simon Wells, the bank’s chief European economist, stated.

The first round of general voting takes place on April 23 and polls suggest the populist National Front leader Marine Le Pen is likely to win that race among a crowded field.  But polls show that the race could tighten once the field narrows. A poll conducted in September indicated Fillon would beat Le Pen handily, 61% to 39% in the second round of elections.

Fillon and Le Pen couldn’t be more of a study in contrast, but they also criss-cross on important nationalistic issues.

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Fillon recognizes the danger of a coming debt crisis, but will the voting public accept it?

Fillon is a free market Republican but also a strong nationalist who has spoken out regarding a threat from Islamist terrorists and is not shy about displaying his Catholic religion. As a free market Republican, he has a preference for significant government spending cuts, wanting to reduce government headcount by 500,000 and reduce spending by 100 billion euros over five years.

To balance a budget in a nation where debt to GDP is 96.10%, Fillon also proposes raising taxes – often the hot rail in politics. He wants to institute a 2% value added tax that critics say will bring on inflation and reduce household consumption.

With these long term measures in place, he anticipates a balanced budget by 2022 – despite near-term spending that would push the budget deficit to 4.7% of GDP. Under Fillon’s plan, the debt to GDP ratio would rise to 102% by 2018, at which time he plans on enacting a constitutional ban on further fiscal deficits, apparently thinking the unknown red line is being approached. The US, for its part, currently has a 104.17% debt to GDP level and rising while the Euro Area average is 90.70% and falling. Italy brings up the average with a 132.7% debt to GDP while Japan is tops at 229.2%.

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Le Pen is long on government spending, Russia and nationalism while short on the US

Marie Le Pen draws a stark contrast to Fillon from a fiscal standpoint, but their difference on the issues of immigration is more nuanced.

The Financial Times categorized her “radical vision” as now having a chance to become reality.

The 46-year-old, once head of a “fringe” political party, has called for the disintegration of the European Union and says the US is the fountain from which dangerous policies flow.

“We are told it’s going to be catastrophic, that it will rain frogs, that the Seine will turn into a river of blood,” she told the FT when speaking of leaving the EU. “There aren’t that many practical problems,” she said while noting that having its own currency France may be more competitive on trade.

She embraces Russia and wants to bring an end to immigration, saying France is under Islamist assault.

In facing Fillon, she may have some unique strategy challenges, The Guardian noted. Fillon has stolen many of her nationalist rhetoric and particularly older voters, who are the most reliable to venture out to the polls, have been skeptical of the fringe left.

“With still more than seven months to go before the final vote, there could be many twists and turns in the French presidential race,” the HSBC report noted.