France’s Political Uncertainty Curbs Investor Confidence
Prosecution of Le Pen is reminiscent of legal attacks against Trump leading up to the US elections
A French court suspended the country’s leading candidate in the 2027 presidential elections from running for office for five years, another worrying sign that democratic norms are eroding in the European Union (EU).
A Paris Criminal Court convicted Marine Le Pen, the right-wing leader of the National Rally (RN), of “embezzlement of public funds.” On March 31, the court sentenced the 56-year-old leader to four years in prison, with two years suspended and two to be served under house arrest.
Political uncertainty will likely exacerbate concerns about Europe’s second-largest economy. The Organization for Economic Co-operation and Development expects GDP growth in France to deteriorate to 0.9% in 2025 from 1.1% in 2024.
France is the third member of NATO this year to bar a candidate from running in elections. Romania barred a far-right populist from participating in May’s upcoming presidential election. Turkey imprisoned President Recep Tayyip Erdogan’s political rival as well.
“In a democracy, the way to beat extremists…is at the ballot-box,” Johns Hopkins University professor of political science Yascha Mounk told CNN on April 5. “If we empower courts to cancel the outcome of elections because we’re shocked by who the winner is, we’re very close to living in a system of government whose ultimate arbiters are judges rather than people.”
The CAC 40, a French benchmark stock index, fell 0.77% on the day of Le Pen’s sentencing, closing at 7,790.
French Court Suspends Le Pen Despite Rise in Popularity
Le Pen’s RN received 37% of the votes, the most of any party, in the June election. That is a significant increase compared with only 0.08% of votes in 2007.
The party has moved from the margins of France’s political landscape to the center. Partly driving that support has been the French resistance to the increase in foreign-born immigration.
Elabe, a pollster for France’s BFMTV news broadcaster, reported that Le Pen would easily win the first round of France’s presidential elections. Their April 5 poll showed Le Pen with about 36% of the vote, more than the most popular candidates in recent history.
Le Pen’s prosecution echoes legal attacks against Donald J. Trump in the lead-up to the November US presidential elections. Given her popular support, RN party officials accuse the French government of waging lawfare against Le Pen.
“She was the person who seemed most able to represent all the people who feel left behind and ignored and in that sense there is an obvious parallel with Trump,” Cambridge University’s professor emeritus of French history, Robert Tombs, told the Spectator.
Court Accuses Le Pen of Illegally Using EU Funds
The court ruled that Le Pen illegally used EU funds to hire four assistants as a European Parliament (EP) member. Prosecutors argued that the assistants worked on RN party matters, not just EP activities, from 2004 to 2017. They fined Le Pen €100,000.
In an interview on TF1, a French news broadcaster, Le Pen condemned the court's ruling.
“Millions of French people are indignant,” Le Pen said. “Indignant to an unimaginable extent seeing that in France...judges have implemented practices that were thought to be the preserve of authoritarian regimes.”
Le Pen’s defense said they would appeal the verdict. They argued that the distinction between a politician’s work as a party member and legislator is artificial. The Paris Court of Appeals will review the appeal within a time frame that may allow her to run if the conviction is overturned or the sentence is altered.
The criminal court said allowing “a person who has already been convicted to be a candidate” would be a “major disruption” to democracy. In the past, the appeals court has postponed such types of sentences pending appeal.
Political Turmoil Is Impediment to Investments
The ongoing political turmoil in France has hurt the country’s economy, hitting confidence. In March, household confidence fell by one point to 92 from February. It remains below its long-term average, according to INSEE on March 26.
Households' opinion on their future standard of living in France has deteriorated. Their sentiment on the ability to save fell slightly. The proportion of households expecting prices to accelerate over the next 12 months increased.
France’s March manufacturing climate indicator declined to 96 from 97 in February. It missed market expectations and moved further below its long-term average of 100.
“France's industry is failing to break out of recession,” Dr Tariq Kamal Chaudhry, Economist at Hamburg Commercial Bank, said on April 1. “The situation remains sobering. French politics remain a major impediment, as uncertainty from Paris hampers investment.”
Supporters Protest after French Court Bars Le Pen
From Paris to Marseille, Le Pen and the RN supporters protested on April 5 and 6 to protest the suspension. RN President Jordan Bardella said the demonstrations called for “a mobilization not against but in support of French democracy.”
Ben Ansell, a professor of comparative democratic institutions at the University of Oxford, told CNN that Le Pen is “playing the victim.”
Far-left French parties held counter-demonstrations over the weekend of April 5. French President Emmanuel Macron’s Renaissance party called the public outcry against the court’s decision an “existential threat to the rule of law.”
“There is no doubt that she is guilty of what she is charged with,” Tombs said. But Le Pen’s actions are “not much of a crime,” he added.
Le Pen, RN Support May Increase after French Court Ban
Prosecutors, for example, tried current Prime Minister François Bayrou and members of his Democratic Movement party on similar charges. He was acquitted because there was insufficient evidence of direct involvement, but eight other officials were found guilty.
Bayrou is currently awaiting another trial after the prosecution appealed his acquittal.
Le Pen's behavior is not “uncommon” for politicians who are members of the EU parliament, Tombs said. “So the questions would be why now and why her?”
Bardella would likely take Le Pen’s place as the party’s candidate. He would win around 36% of the vote in the next presidential election.
The sentence against Le Pen may prevent her from becoming France’s next president. “But it is also likely to add to the political instability and uncertainty," European Policy Centre’s policy analyst Eric Maurice wrote after the court ruling.
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