It's a „treacherous topic“, says Ifo President Clemens Fuest at the Airport Club in Frankfurt when talking about the first-round results of the French parliamentary elections. Because, in his opinion, the future of Europe and the eurozone in particular depends on it. And there is a great danger that everything will slip into the „negative“ because politicians are only focusing on the genuine political dimension of political developments in the neighbouring country: A shift to the right, a shift to the left, a division of the political situation into thirds, ungovernability, standstill.

Indeed, a look at the party programmes or the statements of the radical right-wing Rassemblement National (RN) and the left-wing alliance Nouveau Front Populaire under the leadership of the radical left-wing party La France Insoumise reveals that - regardless of whether they are far-left or far-right - they agree on a whole range of positions: They are virtually united in their support for higher government spending, higher social spending and higher corporate taxes, are generally in favour of higher salaries, are calling for an end to the EU's Green Deal and a return to fossil fuels, and are vowing to reverse the pension reform and thus reintroduce early retirement. The latter is, above all, a concession to the yellow waistcoat protests until last year.

On top of this - as is usual in the vast majority of authoritarian forms of government - all political, social and economic problems are blamed on foreign countries or foreign influences. The country itself is always the victim, and its own actions are never the cause of the difficulties. Instead, Brussels or the EU, Germany or American imperialism or, more generally, the market in and of itself are identified and branded as the „culprits“.

If one adds up the economic demands, Ifo head Fuest calculates that France's debt ratio will rise to „at least 160% of gross domestic product (GDP)“. He is concerned that this will also happen to some extent if President Emmanuel Macron and his centrist government approach the left-wing parties in order to prevent the RN because Macron will have to make concessions. Fuest: „In all scenarios, France's debt will increase dramatically.“

According to Fuest, there is only one reason why the markets have only reacted cautiously to this so far: They assume that - as in the case of Greece - the ECB, the EU and ultimately also the German government want to prevent a significant debt and euro crisis at all costs and will support France if bond interest rates rise. Fuest: „The paymasters are then not the French, as the German government probably still sees it, but all Euro-Europeans and, above all the Germans.“ This is likely to change the overall debate in Berlin when it comes to the German budget, the debt brake and European debt rules.

Fuest speaks of „populist blackmail“ with the calculation that „the other Europeans cannot allow another euro country - and a large one at that - to burst“. Macron is also likely to argue along these lines: „If you don't help, the right-wing radicals will come.“ Such an attitude may also be more accessible for Paris than Berlin, as France is already failing to meet the deficit targets and shrugs off the corresponding accusations and requirements.

According to Fuest, the old „flaws“ of the eurozone are now coming to light once again: The no-bail-out clause, i.e. the requirement not to help any country directly out of its debt problems, to „buy it out“ as it were, was implausible from the outset. Yet, the politicians clung to it and believed in it. Only the markets have shown a realistic view - and will, if necessary, enforce what politicians do not want to recognise or tell their citizens, the Ifo boss expects.