For many investors, the result of the French election became 'known' two weeks ago. The failure of Mélenchon or Fillon to join Marine Le Pen in the second round of the election process was viewed as meaning that the potential market risk event had been averted. As a result, the Eurostoxx 50 jumped 4%. The French electorate would not be left Between the hammer and the anvil. Centrist candidate Emmanuel Macron looked set to pull the majority of the votes from the parties that had been axed after round one, and Le Pen was forecast not be able to significantly increase her vote share. Indeed, last time the Front National made the second round in 2002, they only increased their vote share from 17% in the first round to 18% in the second.
Betting odds of a Le Pen victory, at 1 in 4 before the first round, dropped to about 1 in 7 after her progression to the second round on the basis that Macron would win comfortably. These odds all sound rather familiar…Donald Trump had a 1 in 10 chance of winning just weeks before the election, while the odds of Brexit were 1 in 4 on the day of the referendum. So why could this time be different? Well, in the US, the Electoral College system complicated matters, something which the French election system does not have in common. In swing states, Trump only trailed Clinton by a few points in the polls, a margin he was able to overturn. Regarding Brexit, remainers placed too much confidence in what was actually only a lead of a couple of points in the polls. In France, with polls of 41% vs. 59%, Le Pen is trailing Macron by 18 points; a swing from here would be statistically unprecedented.
Her best chances of closing the gap in the polls were to gain support from the defeated candidates from round one. The majority have gone on to back Macron, but the sixth-placed candidate, Nicolas Dupont-Aignan, who won 1.7m votes in round one has backed Le Pen. This is perhaps unsurprising as he has been promised the role of prime minister if she wins. Other boosters to her cause would have been a scandal against Macron, or outstanding performances in the head-to-head TV debates. The latter did not materialise, with 63% of French viewers declaring Macron the "most convincing" of the pair in last night’s TV debate.
So what else can Le Pen hold on to? Well, surveys suggest that 4 in 10 French voters don’t like either party and there are still 18% undecided voters. In addition, it’s a holiday weekend in France, with Macron’s city-based voters more likely to be abandoning their stations for a weekend in the countryside or by the beach. It is forecast to be 25 degrees in the Côte d'Azur this weekend after all. What this adds up to is a game of turnout and abstention. If only 65% of Macron’s poll-based supporters turn up, but 95% of Le Pens (arguably more dedicated) supporters do, you get a Le Pen victory by a margin of 50.4% to 49.6%.
And what about the shy voter theory, with individuals unwilling to declare their support for less tolerant parties in polls, but in the privacy of the polling express their true feelings? Thanks to Nate Silver’s fivethirtyeight.com, a quick look at the 47 elections in Europe since 2012 in which a right wing party contested, shows that these parties were not able to significantly outperform their actual vote share compared to their previous polling average. So the shy voter theory is a bit of an illusion.
The French election campaign isn’t over yet, but with turnout expected to be high, I can’t see the pollsters getting their third strike in 12 months on this occasion.