French establishment warns of far-right surge

A growing chorus from France’s political, financial and academic establishment is warning that the country is approaching a decisive moment as the far right edges closer to power, unsettling markets and raising questions about the durability of the republic’s economic model and European commitments.

The unease sharpened after confirmation that François Villeroy de Galhau, the long-serving governor of the Banque de France and a central figure in euro-area policymaking, will leave his post a year before the scheduled end of his term. The departure, presented as a personal decision, has been read in Paris policy circles as a signal of deeper anxiety about the political trajectory ahead of the next national votes.

Villeroy, a former senior executive at BNP Paribas who has led the central bank since 2015, has been one of the most vocal defenders of price stability, fiscal discipline and the integrity of the euro. His role on the European Central Bank’s Governing Council has given France an influential voice in monetary debates at a time of high inflation, rising public debt and slowing growth across the continent. His early exit has therefore attracted scrutiny well beyond the confines of central banking.

Officials close to the Elysée Palace have rejected suggestions that the move reflects a loss of confidence in President Emmanuel Macron, whose second term has been marked by legislative gridlock and repeated confrontations with opposition forces. Yet senior civil servants privately acknowledge that the prospect of a far-right breakthrough has injected uncertainty into long-term policy planning, particularly on budgets, debt issuance and France’s relationship with Brussels.

Marine Le Pen’s National Rally has spent years softening its image, distancing itself from its more incendiary past and broadening its appeal among working-class voters hit by high living costs and stagnant wages. Polling over the past year has consistently shown the party leading or competitive in first-round presidential scenarios and dominant in European Parliament contests, reinforcing the sense that its path to power is no longer theoretical.

Business leaders have begun to speak more openly about the risks. Executives from the banking, energy and manufacturing sectors have warned in closed-door meetings that proposals floated by the far right, including tax cuts without clear funding and challenges to European fiscal rules, could unsettle investors and drive up borrowing costs. France already carries one of the highest debt ratios in the euro zone, leaving little room for fiscal experimentation.

Economists note that the alarm is not limited to markets. Senior academics and former diplomats have cautioned that a far-right government could strain France’s alliances at a moment of geopolitical tension, from the war in Ukraine to trade disputes with major partners. While National Rally leaders insist they would respect existing treaties, sceptics point to past rhetoric questioning the primacy of European law and the independence of institutions.

Within Macron’s own camp, the mood has shifted from confidence to urgency. Lawmakers who once dismissed the far right as unelectable now concede that voter fatigue, anger over pension reforms and distrust of traditional parties have reshaped the landscape. Efforts are under way to craft cross-party appeals on democratic values and economic stability, though divisions on immigration, security and public spending remain stark.

Villeroy’s tenure has been emblematic of the technocratic continuity that has underpinned French economic policy for decades, regardless of which party held office. His advocacy of gradual deficit reduction, resistance to politicising monetary policy and emphasis on European coordination have reassured investors during periods of turmoil. The prospect of his departure, even if orderly, has therefore become a symbol in debates about what might change under a different political order.