French Left Set for Shock Victory Over Macron and Le Pen

(Bloomberg) -- A left-wing coalition is on course to win the most seats in France’s legislative election in a surprise blow to far-right leader Marine Le Pen, who had hoped to form the next government.

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The New Popular Front, which includes the Socialists and far-left France Unbowed, is poised to get between 172 and 210 seats in the National Assembly, according to early projections from five polling companies. That’s still far short of the 289 required for an absolute majority in the 577-seat lower house.

Le Pen’s National Rally, which pollsters last week had seen winning the most seats, is expected to come in third, getting between 113 and 152 seats, while President Emmanuel Macron’s centrist alliance is set to place second with 150 to 180. French Prime Minister Gabriel Attal announced that he would present his resignation to Macron on Monday.

The euro weakened in early Asia hours, quoted 0.3% lower at $1.0807 as trading got underway in Sydney.

A victory for the New Popular Front is likely to alarm investors concerned about the state of France’s public finances. The group has promised a major increase in public spending, a boost to the minimum wage and a cut in the retirement age, measures that would provoke a major clash with the European Union. The far-right had promised more moderate spending increases.

“The NFP will implement its program,” Jean-Luc Melenchon, the leader of France Unbowed, told supporters Sunday. “Nothing but its program — all its program.”

Socialist Party leader Olivier Faure opened a route to different alliances, saying his party would continue to follow the compass of the New Popular Front’s program. He added that it’s now the party’s job, with the Socialists at its core, to define a project and “find a path” to respond to the needs and demands of French people.

“We only want one thing, and that’s that the country finds itself again — it’s been too fractured,” Faure said. “The New Popular Front must take charge of this new page of history.”

Even if the New Popular Front doesn’t have the votes to govern alone, it’s likely to demand new spending commitments from Macron in order to form a new administration.

Macron will wait for the new configuration of the National Assembly before making any further decisions on naming the next prime minister, according to a statement from an Elysee official. The president won’t speak Sunday night on the election results.

The projections offer some vindication for Macron’s call to dissolve parliament following a crushing defeat to Le Pen’s party last month. He was been widely criticized for the decision after his party finished a distant third in the first round of voting last week in which Le Pen seized the initiative.

Macron has previously suggested that parties from opposing political groups could govern together to block the “extremes,” opening the door to a centrist coalition.

According to a projection by Toluna Harris Interactive, which broke down the estimates by party, Macron’s group along with the more moderate wing of the New Popular Front, could on paper reach 306 seats, a comfortable absolute majority, even without Melenchon’s group.

The question is whether those parties would be willing to work together. Melenchon said he would refuse to enter into any deal with Macron.

The past week has seen frantic efforts to activate the so called Republican Front — an arrangement in which mainstream parties strategically pull candidates from certain races to bolster anti-National Rally votes. Macron’s party withdrew 76 candidates from runoff contests where they had little chance of winning, in order to avoid splitting the anti-Le Pen vote. The New Popular Front withdrew 130.

National Rally President Jordan Bardella underscored the gains made by the far-right party, which had 89 seats in the previous legislature, and criticized the strategic voting by the mainstream parties.

“Voting arrangements orchestrated from the Elysee palace by an isolated president and an incendiary left is not going anywhere,” Bardella told a crowd of supporters. “I will be there with you and for you until the victory.”

Le Pen put a positive spin on the results, pointing out that National Rally is on course to get the most seats of any single party.

“The tide is rising,” Le Pen said. “It hasn’t risen high enough this time, but it’s still rising.”

France can ill-afford a sharp increase in spending to appease dissatisfied voters since the government is already struggling to contain the budget deficit. The European Commission last month put the country in a special procedure for breaching deficit rules that could make it difficult to limit efforts to implement any ambitious spending plans while adhering to EU rules.

(Updates with Attal’s resignation in the third paragraph, euro trading in the fourth.)

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