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Why is the Bank of England interfering in French politics?

A Le Pen victory has little effect on British public finances. Credit: Getty

June 28, 2024 - 2:30pm

The Bank of England is now piling on Marine Le Pen and her Rassemblement National (RN) party in what could be construed as political interference in a foreign election. In its June Financial Stability Report, the BoE warned that a victory for Le Pen’s party could have a negative impact on Britain’s capacity to borrow. The argument is obviously nonsensical — an RN win has little effect on British public finances because they are two separate countries with separate public debt markets — and reveals a central bank that is stepping well outside its purview.

Since the French President Emmanuel Macron called an election earlier this month a slew of news stories have appeared, claiming that if the RN wins the bond markets will dump French government debt. They claimed that this would cause a crisis not dissimilar from what happened to Liz Truss’s government in 2022 when it tried to push through tax cuts. If this happens, it will only be because certain people in the Brussels technocracy have decided to draw attention to the public borrowing figures after Macron called an election.

After the sovereign debt crisis of 2011, the European Central Bank committed to stabilise government bond markets if borrowing costs soared. This meant that countries which adopted the euro — such as France — have had their debt backstopped by the ECB since Mario Draghi’s famous “whatever it takes” speech in 2012. In response to the panic caused by a potential RN victory, however, the ECB has been noncommittal about supporting the market, leading some to think that the bond markets are being weaponised against democratically-elected governments in Europe.

But new research suggests that voters are not convinced. A poll from last week found that 25% of respondents had the most confidence in Le Pen’s party on the economy while only 20% had confidence in Macron’s alliance. Among the same respondents, 22% had the most confidence in the Left-wing New Popular Front (NFP). Why, then, is the ECB dragging its feet?

The problem is that centrist parties like Macron’s have destroyed their own credibility on the economy, and so voters do not listen to them when they accuse others of economic incompetence. Take Ukraine, for example. Since the Russian invasion in early 2022, the French economy has been hobbling along, with GDP growth hovering at around 1%. Meanwhile, French manufacturing has been contracting since the summer of 2022 and high energy prices are leading to severe stagnation in the French economy. All of these factors have contributed to Macron’s unpopularity.

The problem for France, however, is that the genie is already out of the bottle. Bond markets are now watching the French election carefully and there is every chance that they will go into meltdown if the RN wins. Macron’s supporters thought that spreading this message would scare voters away from Le Pen, but they completely underestimated their own lack of credibility on the economy.

The result is that a French fiscal crisis, engineered by a discredited elite, may now be all but inevitable. If such a crisis occurs it will only make the electorate even angrier than it currently is. Expect plenty more political instability in France in the coming years.


Philip Pilkington is a macroeconomist and investment professional, and the author of The Reformation in Economics

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Peter B
Peter B
20 days ago

If anyone thinks that the French welcome advice from the British (Bank of England or otherwise) and will follow it, they really don’t know France. If the BofE message has any effect, it will be the opposite of what they hope for. There ought to be a name for this sort of effect – perhaps the “Obama effect” – since he memorably had a go at telling us what was best for us, only to discover that we didn’t care for his advice and preferred to do the opposite.
It’s the same with the current media onslaught against Nigel Farage. Just who are these people who after decades of incompetence and dissembling assume we’re still listening to them ? Their messages are no longer heard – only reacted against. And they have only themselves to blame.

Mike Downing
Mike Downing
20 days ago
Reply to  Peter B

Yep; the same idiots that were surprised that flooding the economy with zillions of pretend money (QE) actually led to runaway inflation.

UnHerd Reader
UnHerd Reader
17 days ago
Reply to  Mike Downing

….but it didn’t cause runaway inflation. Not the inflation that BofE and Sunak claim to have been getting back under control. The aftermath of Covid and the Ukraine war created the inflation which would have disappeared its own accord in 12 months time because that is how the numbers work. The inflation we have had has been exacerbated 9nay some would say caused by the BofE hiking interest rates.

I would agree that there has been some runaway inflation in asset prices which is to be expected when QE was bailing out the busted banks with no obligation.

Gordon Black
Gordon Black
20 days ago

Aux armes, citoyens,
Formez vos bataillons,
Marchons, marchons !

AC Harper
AC Harper
20 days ago

The result is that a [insert your own country here] fiscal crisis, engineered by a discredited elite, may now be all but inevitable.
Bit of a theme perhaps?

Andrew Buckley
Andrew Buckley
20 days ago
Reply to  AC Harper

Nothing like a decent fiscal crisis to knock the Plebs back to where they should be!

Jim Veenbaas
Jim Veenbaas
20 days ago

The Bank of England is supposed to be non partisan and independent. Clearly, that’s not the case. What’s the point of its existence then? If it is so worried about spending, BOE should start warning us of net zero, the ultimate sinkhole of govt spending.

Prashant Kotak
Prashant Kotak
20 days ago

Not only do we have a Uniparty in the UK, we now have a burgeoning Global Technocracy – a Mondocracy. Ergo, for the Mondocracy, there is no such thing as a ‘foreign election’.

Lancashire Lad
Lancashire Lad
20 days ago
Reply to  Prashant Kotak

I quite like this idea – Mondocracy.

Give Homo Sapiens another millenium (if we can make it) and that’s what we should be looking towards. The challenges of the 3000s will require it.

In the meantime…

Karen Arnold
Karen Arnold
20 days ago
Reply to  Prashant Kotak

I think it is dawning on this Global Technocracy that they may have lost control and the demos are not listening. What to do though, accept the inevitable after a period of chaos or try to impose technocratic rule and give up on democracy? Personally I think the demos should be much more involved in the control of the decisions.

Lancashire Lad
Lancashire Lad
20 days ago
Reply to  Karen Arnold

Well, my comment wasn’t altogether serious. Who knows what will be important a thousand years from now? There’s nothing to stop the mondocratic government being democratic (although someone with an imagination deficit might downvote!)

Mangle Tangle
Mangle Tangle
15 days ago
Reply to  Prashant Kotak

A mediocracy…

Jake Raven
Jake Raven
20 days ago

“Why is the Bank of England interfering in French politics?”Because the BoE are part of the left wing establishment, and can’t stand that the right wing is making a resurgence. It can’t deal with the fact the world is changing and the left have had its day.

Ian Barton
Ian Barton
20 days ago

I suspect that the BoE have been encouraged to do this by Christine Lagarde at the EU. The senior BoE staff – who are looking out for their next globalist career move – have obediently complied.