A snap election in France could see the far right seize power, as voters head to the polls.

• On Sunday, the first round of a snap parliamentary election will take place in France as voters head to the polls.
• In June, polls suggested that the National Rally party might gain the most votes, but would still fall short of a majority.
• Last month, Emmanuel Macron, France's President, surprised the public and political analysts by announcing a snap election following his Renaissance party's poor performance in European Parliament elections.

On Sunday, French voters will cast their ballots in the first round of a snap parliamentary election, with polls indicating that the far-right National Rally group may emerge as the largest party in France's National Assembly.

In early June, France's President Emmanuel Macron surprised the electorate and political pundits when he called for a ballot after his Renaissance party suffered a drubbing in European Parliament elections to the National Rally, led by Jordan Bardella and veteran right-wing politician Marine Le Pen.

Macron announced a snap election, consisting of two rounds of polling on Sunday and July 7, stating that it would offer "clarity" and that France requires a definitive mandate to act with tranquility and unity.

The shock move of Macron was predicted by analysts to be motivated by the belief that, even if National Rally performs well, a chaotic and disordered period in power will decrease the chances of Le Pen becoming the French leader in 2027.

French citizens' fear of a far-right government is what Macron is banking on in the upcoming election.

In June, voter polls have consistently shown that National Rally is leading the race, with around 35% of the vote, followed by the leftist New Popular Front bloc with around 25-26% and Macron's centrist Together alliance in third place with around 19%.

If no single party can achieve an absolute majority of 289 seats in the 577-seat National Assembly after the vote, a strong showing for National Rally will put pressure on Macron to appoint a prime minister from the party.

The new PM, likely 28-year-old National Rally President Jordan Bardella, would have a significant say over France's domestic and economic policy, while President Macron would remain in charge of foreign policy and defense.

The vote would force ideologically different politicians into an uncomfortable alliance, resulting in a fractious and unstable government, which may cause concern among economists about the impact on the euro zone's second-largest economy.

According to Peter Garnry, head of Strategy at Saxo Bank, the market has responded negatively to the election uncertainty, resulting in underperformance of French equities and a widening of the France-Germany 10-year yield spread.

Although some views suggest that the market may be overreacting, drawing parallels to Italy's experience under Prime Minister Giorgia Meloni, whose initially feared policies were more pragmatic than expected, he noted.

Deal-making

After the election, political analysts predict that a period of intense negotiation will occur as parties attempt to form alliances and gain a parliamentary majority, which may result in a challenging and protracted process.

According to George Dyson, senior analyst at Control Risks, the 2022 elections are unlikely to result in a majority government for any party or bloc. However, some polls suggest that the RN may have a chance of forming a government. As a result, the next government is likely to require negotiations between different parties.

"If the RN receives enough votes to nearly form a government, it may gain support from dissident Republicans to achieve a majority or assert that no other government is viable."

The next administration may be a left-wing government that can gather support from the Republicans and Macron's centrist Renaissance party, as suggested by current polling indicating that the united left bloc will be the second largest in parliament after the RN.

Dyson stated that Macron is likely to seek support from centrist parties to nominate a candidate for prime minister, but the parties are unlikely to provide their backing as his party is projected to underperform.

If a new prime minister were backed by centrist parties, the government would still be subject to regular confidence votes and would need to engage in complex consensus-building every time it attempted to pass legislation that was even slightly divisive, according to Dyson.

A left-wing prime minister would likely find themselves at odds with a far-right government that has a parliamentary majority, as the president would likely use his position to undermine its policy plans, according to Dyson.

Dyson stated that political uncertainty and instability will be heightened in all cases, resulting in backtracking and changes to announced policy plans amid repeated negotiating and consensus building. This will create regulatory uncertainty for businesses.