Will Macron’s gamble pay off?

One explanation for Emmanuel Macron’s decision to call a snap legislative election in France is that he believes the National Rally will win, govern and “make a mess of it” ahead of the next presidential election. However, as Donato Di Carlo and Federica Genovese explain, the record of other European populist parties in power suggests the threat of chaos ensuing under the National Rally may be at least partly unfounded.

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June’s European elections tilted the European Parliament significantly to the right. The most shocking result was the National Rally’s (RN) landslide victory in France. As a response, Emmanuel Macron dissolved the French National Assembly – a decision that wreaked financial havoc in France and sparked heated debates among Europe’s elites.

Among the various possible interpretations, notable commentators have argued that Macron’s bet is to have the RN win, govern, and “make a mess of it” – a risky move with the hope of discrediting the RN ahead of the next French presidential election. However, the coolness of the National Rally’s reception of the news, in addition to the chaotic offer to build a political alliance by the centre-right Republicans, suggest the RN feel ready for the challenge. Evidently, this decision may end up giving space to the far right in the legislative and, possibly, the executive in 2027.

Betting against the populists

With even Macron’s closest supporters panicking, one may legitimately ask about the logic behind the President’s move. Presumably, this stems from an old assumption about the economic consequences of extremist parties – namely that these parties are economically incompetent and bring about financial instability, such that a centrist republican front should inevitably retain control of power.

As such, current events pose an interesting question, namely: do extremist, specifically hard (right) populist parties, necessarily lead to economic instability? Or is reality more complex – is there more market appetite for some forms of populism than some believe, and do such parties change when they move from the electoral arena to power?

The current Italian experience of far-right leadership under Giorgia Meloni provides some insights. Despite a serious demographic crisis and long-term productivity and wage stagnation, Italy’s economy is not in recession. Rather, it is performing relatively wellcompared to France, Germany and the UK.

While the economic uptrend is certainly rooted in the policies inaugurated by previous governments (investment-led growth was bolstered by Italy’s superbonus programme and the Recovery fund), the Meloni executive has steered well away from upending the trend. At a minimum, this government’s track record shows that a coalition of right-wing populist parties can govern for two and a half years without any serious financial turmoil. What explains these outcomes?

The constraints of power

As argued by political scientist Peter Mair, among others, all parties face a dilemma between responsiveness – responding to their electoral constituencies – and responsibility, that is governing the economy responsibly for the common good, under binding legal and international constraints. What characterises radical parties is, at least in principle, the extreme positions they hold on various public policy matters.

Clearly, the more extreme a party’s electoral positions, the more difficult it is to reconcile responsiveness with responsibility and respond to voters’ demands once in power, when the legal and financial constraints become binding. Along similar lines, the more binding constraints are on governments, the more it becomes difficult and costly for parties in power to shift the course of economic policymaking toward radical positions.

Governments’ room for manoeuvring on economic policymaking is rather limited, both by domestic and international factors, in Europe not least by the Eurozone’s economic governance regime. These institutional structures leave European extremist parties with limited agency on fiscal and monetary matters, incentivising them to focus on “noisier” issues, such as cultural or immigration politics.

Another reason for this is that while politicians come and go, bureaucrats stay – and the latter run the state on an everyday basis. Populist parties with little experience in power are particularly reliant on the collaboration of administrators who design and implement policy. Like Italy, France relies on a professionalised bureaucracy, with civil servants who can act as a brake in favour of responsible economic policymaking.

On the external front, European governments have arguably become “semi-sovereign” in the EU’s multi-level polity. Eurozone governments’ economic and social policies are starkly constrained by the European Semester, which aligns their budgetary and economic policies with the objectives agreed upon at the EU level.

Yet while France may have often been considered “too French too fail” (“parce que c’est la France”), the Commission is preparing to name and shame France under the excessive deficit procedure. As if this were not enough, extremist parties in power are likely to come under greater financial stress due to the higher borrowing costs bond vigilantes demand while pushing back against extremist agendas. This gives large incentives to extremist parties to behave on economic matters.

How did all of this pan out in Italy?

In the case of the Meloni government, both internal and external constraints justified a turn towards more responsibility in power, while carving out minor policies at the fringe for electoral rents and noisy cultural issues. On the external front, the Meloni administration has backed up its normalisation to voters by pointing to Italy’s vulnerability in relation to international financial observers and the need to “change Europe from within”.

Against this backdrop, it appears that Meloni has seized the opportunity to embrace conventions and institutionalisation. She has consequently maintained an (apparent yet ambivalent) equilibrium between responsiveness and responsibility that is paying off, materially – for instance in terms of current access to European resources such as NextGenerationEU funding – and reputationally.

The victims of this process are first and foremost those at the end of the “cultural policies” that these parties fight in substitution of the economic battles – see for example Meloni’s focus on identity issues and abortion rights. But there are other losers in the long run, notably most technocratic and centrist parties similar to Macron’s Renaissance. Ultimately, however, far-right parties vary across countries and so do the conditions in which they can adapt and prosper while in power.

So, all in all, if Italy’s experience can teach us something, it is that the assumption that Macron’s gamble will pay off because, if victorious, extremist parties are inherently economically incompetent may well be misplaced – and might be costly for the leaders that expect them to systematically derail once in power. To the contrary, the experience of radical populist parties in power across local governments indicates that, driven by a desire to establish more mainstream status, radical parties tend to focus on balancing budgets and reducing debt levels to project governing performance and competence.