What Could France’s Presidential Election Mean for Investors?

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Part 5
What Could France’s Presidential Election Mean for Investors? PART 5 OF 5

France’s Potential Referendum on EU Membership

Advantages of remaining in the EU

The Eurozone (EZU) (VGK) economy has faced various challenges in recent years, and low economic growth has been one of the major concerns for the area. To overcome this, the European Union (FEZ) has taken several steps, including minimizing trade barriers to allow free trade between its member countries, and this has been a key benefit. But what other advantages does EU membership offer?

France&#8217;s Potential Referendum on EU Membership

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Immigration and the ECB

The EU’s light immigration laws, which allow young talent to move among member countries for employment, have helped and continue to aid the economic development of EU countries. Likewise, the lower interest rate provided by the ECB (European Central Bank) has helped EU nations do business because low-interest rates keep the cost of capital expenditure low for firms.

As the UK (EWU) has already decided to leave the European Union, it will not be eligible for such benefits. Similarly, if France (EWQ) opted to do a referendum to make its exit from the European Union, it would also not be eligible for the above benefits. After the UK’s Brexit outcome, there are more uncertainties lying in wait for the future of the European Union. The single monetary policy and various fiscal policies, for example, are major problems for member countries.

National Front (FN) party candidate Marine Le Pen, who got the second-highest number of votes in the first round of the French Presidential election, promised during her campaign that if she’s elected, she will conduct the referendum to decide on a potential exit from the European Union (EZU) (HEDJ). If that happens, however, it would not only hamper France’s trade relations with other EU countries but also hamper global trade.

For more on this subject, you may be interested in reading Market Realist’s Bill Gross: ‘All Asset Prices Elevated to Artificial Levels’.


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