French elections: what to expect should Le Pen prevail

Should Marine Le Pen win the French presidential election, the immediate reaction of markets is likely to be a spike in volatility for French assets due to the uncertainty of what is to come.

A Le Pen victory increases the likelihood of France’s withdrawal from the euro, so we would expect the spread of French bond yields over German bunds to widen significantly.

If the EU was to break up and individual countries return to their pre-euro currencies, the interconnected EU banking system would come under significant pressure, with consequences for the financial sector globally.