France faces an uncertain future after Le Pen's defeat in a divided parliament

Marine Le Pen was defeated, but that doesn't mean the situation in France has stabilized. The country faces the risk of ungovernability. The markets have already reacted to the election results. The value of the euro has decreased, and investors are uncertain about the proposals of the victorious far-left.

The unexpected victory of the "front against Le Pen" offers only partial satisfaction. The third position of the far-right and Russia-linked party Rassemblement National (RN), led by the charismatic Jordan Bardella, moves away from the risk of changes in the country's foreign policy but creates a complex puzzle in the new National Assembly.

Another radical wing is winning, this time on the other side of the political and ideological spectrum—the leftist coalition of the New People's Front. One of the leaders of France's New People's Front (NFP), Raphael Glucksmann, noted that although his bloc won the parliamentary elections, it does not have an absolute majority.

The second position was taken by the group from which President Emmanuel Macron originates.

None of the groups is strong enough to govern alone, needing 289 seats. Commentators emphasize that forming a coalition government will not be easy, and predicting what it will look like is difficult.

Prof. Aleksander Smolar, a political scientist and former president of the Batory Foundation, reminds us that the left is very divided. "While the social-democratic part of the left can co-govern with the centrists and democratic right—this is the part of the left directed by Raphael Glucksmann for the European elections—France Unbowed by Jean-Luc Mélenchon consists of radicals, with whom neither the centrists nor the democratic right will want to form a government," he explained.

The markets have already reacted to the country's chaos. As Bloomberg reports, futures on French bonds fell, the euro fell, and futures on European stocks slightly increased.

The agency reminds us that the involvement of the left in broad fiscal policy easing has raised concerns about France's strained finances and could increase tensions with the European Union.

Investors are also keeping an eye on the winning party. "Political uncertainty and pressure on French government bonds pose an upcoming risk for banks as they are major holders of French debt. The left has also talked about raising mandatory capital buffers for banks and transaction taxes and has presented plans for higher taxes on wealth, dividends, and share buybacks," Bloomberg notes.