Macron as French President: How Will Macron Affect Brexit?

So all the opinion polls were right, and France elected independent candidate Emanuel Macron as President, beating Front National’s Marine Le Pen by a wide margin. Now Macron is installed in the Elysee Palace stage. In particular, what does his presidency mean for relations with the UK. After all, with Brexit taking place in March 2019, it means negotiations will have to be completed during his term in office. Since France is one of the two biggest powers in the EU, Macron will at least try to have influence on the outcome of these talks. Furthermore, with terrorism on the increase across Europe, and many of the terrorists have to cooperate in terms of security.

Lilyfields About Brexit and Macron

With the UK’s Conservative party set to win another 5 years in office in the June snap election, it seems that the next half-decade will see much sparring between Macron and Theresa May. What can we expect?

On the campaign trail, Macron said he favoured a hard Brexit, with the UK being left outside the Single Market, unless they maintain freedom of movement. He also stated on multiple occasions that the UK should face ‘consequences’ for leaving the EU, in order to discourage others from leaving. A committed Europhile, Macron wishes to increase integration between EU members, and encourage Germany to loosen the purse strings and allow for more deficit spending from member states.

He claims he can France’s labour markets and tax system. We wish him luck with this, given that the last three Presidents who tried faced riots, but if he succeeds, then this should strengthen France and the rest of the EU, and allow them to take a harder line in Brexit talks. It might force the UK to allow freedom of movement in return for staying in the Single Market. While many Brexit voters made their decision based on a wish to reduce immigration, such a volte face from Theresa May might be made more palatable if Britain is in recession and Europe’s economy is rebounding.

So if Macron really meant what he said in his election campaign, and can get what he wants from the French trade unions and the Germans, then it looks like France could drive a hard bargain with the UK.

However…

It should be noted that there are several limits to what Macron can choose to do, and counter forces which will mean he might not get his own way. First of all, we should note that at the time of writing (late May 2017), the French parliamentary elections have not taken place, and the results of this vote could drastically affect Macron’s ability to push through the reforms he has planned. Secondly, the fact that France is part of the Euro area means that Macron is limited to what he can do in terms of monetary policy.

The European Central Bank sets interest rates and decides on monetary easing, and although the ECB is run by an overspending to stimulate growth. Lastly, any deal he might help strike with the UK over Brexit will still need to be ratified by every parliament in the EU, including 3 in Belgium alone. We saw last year how the EU-Canada trade deal was derailed by this ratification process, and we can’t see the Brexit terms be any easier for all parties to agree on.

So while the election of Macron may be seen as heralding a tough line on Brexit, there are limits to what he can do. As always in politics, a week is a long time, and five years is an eternity. We expect that Franco-British relations will be much more subject to changing events and external influences than most analysts would like to admit. With so many weak economies in the Euro area right now, as well as a refugee crisis which shows no sign of slowing down, rampant cross-border terrorist activity and increasingly nationalist voting patterns, we predict turbulence and nations falling out with each other more and more.

Should Italy share the same currency as Germany? For that matter, should France and Germany share a currency, given that their economies are so different? Here at Lilyfields, we think not, and that five more years of divergent political opinions within the EU will mean agreements will be hard to come by. For this reason, we don’t see a soft Brexit as a likely scenario, no matter who is President of France.