France votes in snap election that could hand power to the far right

French voters are heading to the polls on Sunday for the first round of voting in a snap parliamentary election that could see the far-right National Rally group become the biggest party in France's National Assembly, polls suggest.

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

Calling the snap election, which involves two rounds of polling on Sunday and on July 7, Macron said the vote would provide "clarification" and that "France needs a clear majority to act in serenity and harmony."

Analysts said Macron's shock move was likely based on the gamble that, even if National Rally performs well, a potentially chaotic and disordered period in power will reduce the likelihood that his rival Le Pen will assume French leadership in 2027.

Close watchers of French politics also note that Macron is ultimately betting on French citizens fearing a far-right government and voting against the nationalist and anti-immigration party.

But voter polls in June have consistently put National Rally ahead in the race, predicting the party will take around 35% of the vote, ahead of the leftist New Popular Front bloc with around 25-26% of the ballot and Macron's centrist Together alliance, in third place with around 19% of the vote.

Even if a hung parliament is the most likely outcome of the vote — with no single party looking as if it can achieve an absolute majority of 289 seats in the 577-seat National Assembly — a strong showing for National Rally will put pressure on Macron to appoint a prime minister from the party.

That new PM — who in this scenario would likely be the 28-year-old National Rally President Jordan Bardella — would then have a significant say over France's domestic and economic policy, while President Macron would remain in charge of foreign policy and defense.

In any case, such an outcome would force ideologically different (and often opposed) politicians into an uneasy and awkward "cohabitation" where government is likely fractious and unstable, prompting some concern among economists as to how the vote could affect the euro zone's second-largest economy.

"The market has reacted negatively to the election uncertainty, with French equities underperforming and the France-Germany 10-year yield spread widening," Peter Garnry, head of Strategy at Saxo Bank, said in a note Monday. 

"Despite this, some views suggest 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.

Political analysts point out that a period of hard bargaining is likely to follow the election, as parties look to forge alliances that would enable them to achieve parliamentary majority and govern as fractiously as possible. It could be a torturous process, analysts warn.

"As with the 2022 elections, no party or bloc is likely to secure enough seats to form a majority government, although some polls give the RN an outside chance of doing so. The next government is highly likely to require some form of negotiation between different parties," George Dyson, senior analyst at Control Risks said in analysis Monday.

"In the event that the RN secures enough votes to come close to forming a government, it will potentially be able to secure support from dissident members of the [center-right] Republicans to secure a majority or argue that no other government is feasible."

Dyson noted that, as current polling suggests that the united left bloc will be the second largest in parliament after the RN, the next administration may also conceivably be a left-wing government that can cobble together support from the Republicans and Macron's centrist Renaissance party.

"Macron will likely push for support from centrist parties to put forwards a candidate of his choosing for prime minister, but the parties would be unlikely to provide their support as his party is projected to perform very poorly," Dyson said. 

Even if a new prime minister were supported by centrist parties, the government would be "subject to regular confidence votes and will have to engage in complex consensus-building every time it seeks to pass legislation that is even remotely divisive," Dyson added.

A far-right government with a parliamentary majority would meanwhile find itself at odds ideologically with the president, "who would likely use his position to undermine its policy plans," Dyson added. "A similar but less dramatic situation would likely occur between a left-wing prime minister and the president."

"In all cases, this will result in heightened political uncertainty and instability. It will also result in backtracking and changes to announced policy plans amid repeated negotiating and consensus building, creating regulatory uncertainty for businesses," Dyson said.