French President Emmanuel Macron announced on Sunday that he will dissolve the French National Assembly after his ruling party lost to the far-right party led by Marine Le Pen in the European Parliament elections. A legislative election, considered a high-stakes gamble, will be held later this month.
The Renaissance party led by Macron currently holds 169 seats in the National Assembly, making it the largest party out of 577 seats. Le Pen’s National Rally is the largest opposition party with 88 seats.
Macron’s surprising move indicates that there has not yet been a survey conducted on what the new National Assembly (the lower house of the French parliament and the most powerful legislative body) will look like after the re-election.
The strong performance of the National Rally in the European Parliament elections reflects voter dissatisfaction with issues such as immigration, crime, and the cost of living in France. To win an absolute majority in the French lower house, the party needs to increase its number of members to 289.
The parliamentary elections are held in two rounds, scheduled for June 30 and July 7, respectively.
If the National Rally or any other party wins the majority of seats in the parliament, Macron will be forced to nominate one of them as Prime Minister from his own party. The Prime Minister will then be responsible for selecting cabinet ministers.
This could lead to a situation known as “cohabitation.”
France has experienced periods where a president and prime minister from different parties cohabitated, a total of three times since the establishment of the Fifth Republic in 1958.
In such a scenario, the president retains control over defense and foreign policy – the constitution states that he is responsible for negotiating international treaties, but loses the power to formulate domestic policies.
The last time this happened was in 1997, when the center-right President Jacques Chirac dissolved the parliament, expecting to win more seats, but unexpectedly lost to the left-wing alliance led by the Socialist Party.
Socialist leader Lionel Jospin served as Prime Minister for five years during which he implemented the 35-hour workweek.
Jordan Bardella, 28, is Le Pen’s protege and the leader of the National Rally. There have been rumors that if Le Pen is elected president in 2027, he may become the Prime Minister.
If a National Rally government is formed and holds a majority in the parliament, the party will be able to freely implement its domestic agenda.
If the President and Prime Minister disagree, the cohabitation scenario could lead to policy uncertainties, causing market instability. Bond spreads will reflect market sentiment.
In the 2022 presidential campaign, Le Pen advocated prioritizing social housing for French citizens, addressing asylum applications outside France, and abolishing inheritance tax for the middle class and low-income families.
While the President retains dominance in defense and military matters, the Prime Minister and government also have a say, leaving room for differences of opinion that largely depend on the dynamics between the two individuals.