Will France leave the Euro and reclaim its national identity?

Marine Le Pen. (Photo: EPA)

Marine Le Pen. (Photo: EPA)

We have a minor earthquake in France. A party committed to withdrawal from the euro, the restoration of French franc, and the complete destruction of monetary union has just defeated the establishment in the Brignoles run-off election.

It is threatening Frexit as well, which rather alters the political chemistry of Britain's EU referendum.

Marine Le Pen's Front National won 54pc of the vote. It was a bad defeat for the Gaulliste UMP, a party at risk of disintegration unless it can find a leader in short order.

President Hollande's Socialists were knocked out in the first round, due to mass defection to the Front National by the working-class Socialist base. The Socialists thought the Front worked to their advantage by splitting the Right. They have at last woken up to the enormous political danger.

The Front National is now the most popular party in France with 24pc according to a new Ifop poll. Both the two great governing parties of the post-War era have fallen behind for the first time ever. The Gaullistes (UMP) are at 22pc, and the Socialists at 21pc.

I am watching this with curiosity, since Marine Le Pen told me in June that her first order of business on setting foot in the Elysee Palace (if elected) would be to announce a referendum on membership of the European Union, with a "rendez-vous" one year later:

I will negotiate over the points on which there can be no compromise. If the result is inadequate, I will call for withdrawal. Europe is just a great bluff. On one side there is the immense power of sovereign peoples, and on the other side are a few technocrats.

Asked if she intended to pull France of the euro immediately, she hesitated for a second or two and then said: "Yes, because the euro blocks all economic decisions. France is not a country that can accept tutelage from Brussels."

Officials will be told to draw up plans for the restoration of the franc. Eurozone leaders will face a stark choice: either work with France for a "sortie concerted" or coordinated EMU break-up: or await their fate in a disorderly collapse.

"We cannot be seduced. The euro ceases to exist the moment that France leaves, and that is our incredible strength. What are they going to do, send in tanks?"

Her four sticking points on EU membership are withdrawal from the currency, the restoration of French border control, the primacy of French law, and what she calls "economic patriotism", the power for France to pursue "intelligent protectionism" and safeguard its social model. "I cannot imagine running economic policy without full control over our own money," she said.

As I wrote in June, the Front has been scoring highest in core Socialist cantons, clear evidence that it is breaking out of its Right-wing enclaves to become the mass movement of the white working class.

Hence the new term in the French press "Left-Le-Penism". She is outflanking the Socialists with attacks on banks and cross-border capitalism. The party recently recruited Anna Rosso-Roig, a candidate for the Communists in the 2012 elections.

Mrs Le Pen's EMU withdrawal plan is based on a study by economists from l'École des Hautes Études in Paris led by Professor Jacques Sapir. It concludes that France, Italy, and Spain would all benefit from EMU-exit, restoring lost labour competitiveness at a stroke without years of depression.

Their working assumption is that the eurozone's North-South imbalances have already gone beyond the point of no return. Attempts to reverse this by deflation and wage cuts must entail mass unemployment and loss of the industrial core.

Prof Sapir said the gains are greatest in a coordinated break-up with capital controls where central bank intervention steers the new currencies to target levels. The model assumes that the D-mark and guilder are held to a 15pc rise against the old euro, while the franc falls 20pc.

The gains are less if EMU collapses in acrimony and currencies overshoot. This would inflict a violent deflation shock on Germany, but would still be strongly positive for the Latin bloc.

I don't wish to get into a debate about whether or not the Front National has genuinely purged its anti-Semites, or whether its immigration and culture policies must inevitably lead to a drastic showdown with France's 5m-plus Muslims. This is a finance blog.

My own impression is that she is more relaxed about gay rights and abortion than she lets on, closer in some ways to the assassinated Dutch populist Pim Fortuyn than to her father Jean-Marie Le Pen, who in turn complains that she picked up "petit bourgeois" views in Paris schools.

The fact is that her campaign of "dédiabolisation" or image detox seems to have worked. Only a minority of voters still thinks the Front is a "threat to democracy". Mrs Le Pen is winning over white working-class women in droves. The feminised Front is no longer the party of the angry white male.

READ ENTIRE ARTICLE HERE: http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100025783/time-to-take-bets-on-frexit-and-the-french-franc/

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