Irish shares join sell-off on far right prospects in French vote
French finance minister Bruno Le Marie. French shares as tracked by the Cac 40 index fell sharply on Friday and ended the week 3% lower.
Irish shares joined in a Europe-wide sell-off as French finance minister Bruno Le Maire warned the eurozone's second-biggest economy faced the risk of a financial crisis if the far right were to win snap elections in the coming weeks.
Opinion polls project Marine Le Pen's eurosceptic National Rally, or RN, which has promised to cut electricity prices, Vat on gas, and increase public spending, is on track to top the June 30 and July 7 vote after winning European Parliament elections.
"When I look at the far right, I see a programme that is made of lies," Mr Le Maire told French radio, urging voters instead to back president Emmanuel Macron's centrist party's candidates.
The RN calls for protectionist "France first" economic policies and has made reducing the cost of living a top priority of its campaign. It has also proposed higher public spending, despite already significant levels of public debt.
French bonds and shares have taken a beating this week, and ratings agency S&P Global, which recently downgraded the country, said policies advocated by the RN could have implications for the credit rating.
The risk premium investors are demanding to hold French government bonds rose to its highest level since early 2017 on Friday. The spread between French and German borrowing costs was on track for its biggest weekly rise since the eurozone debt crisis in 2011, at more than 25 basis points.
French shares as tracked by the Cac 40 index fell sharply on Friday and ended the week 3% lower. Germany's Dax index fell at one stage by 1% in the trading session, and a sell-off in Irish bank shares weighed on the Iseq index in Dublin.
Asked whether the current political instability could lead to a financial crisis, Mr Le Maire said "yes".
"This is because of the political programmes that are on the table with regard to the question if we will be able, yes or no, to keep financing this debt," he said. "I'm sorry, they [the far right] do not have the means to afford these expenses," said Mr Le Maire, who had been tabling multi-billion savings to put France's finances back on track.
While opinion polls see little chance of the left winning the election, Mr Le Maire said a newly agreed leftwing alliance, which wants to lower the retirement age and introduce a new wealth tax for the rich, would also be as bad for the French economy.
Meanwhile, Ms Le Pen and RN leader Jordan Bardella both accused Mr Le Maire and Mr Macron of lying over the state of France's economy.
"To allow you to understand the real situation of the public accounts after so many lies from the economy minister, we will take stock of the financial state and budget of the country," Mr Bardella said in a campaign video, spelling out what would be one of his first decisions if he became prime minister.
"Mr Macron's government has lied," Ms Le Pen said as she campaigned in northern France on Friday, accusing government ministers of hiding the real state of France's finances and the impact of the reforms they have carried out over the past seven years.
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