Marine Le Pen could 'blow up' the European Union, and the fear's starting to show

In a November interview with CNBC, the leader of the Front National party said France has suffered "tremendous losses" in many sectors, adding it needs a strategic plan bring it back to its feet. Unlike the United Kingdom, France also uses the euro, and so would have to change currencies if it left the European Union.

French elections typically happen in two rounds. Recent polls show Le Pen winning the first round of voting, scheduled for April 23, but losing in the May 7 run-off vote between herself and whoever comes in second in the first round.

"Most polls suggest the Front National will lose the election," said IHS' Iscaro. "That said, polls have been wrong recently, so we have to take it with a pinch of salt."

Most polls about the Brexit referendum in the United Kingdom and, most noticeably, the U.S. presidential election were wrong.

Anxiety about Le Pen possibly winning the French presidency has troubled investors globally.

"If Le Pen wins, we're going to have a crisis within the euro," said Peter Cardillo, chief market economist at First Standard Financial in New York, adding that such a major disruption would further lift the U.S. dollar.

The euro has fallen 3.6 percent against the dollar over the past year.

Euro/dollar 1-year chart

Source: FactSet

IHS Markit's Iscaro noted, however, that a Le Pen victory doesn't guarantee France's departure from the European Union. Le Pen would need to garner enough support in parliament to call for a referendum and then people would have to vote in favor of leaving the single-currency bloc.

"Again, it's not impossible, but it's also not a done deal that if the Front National win, that France will leave," he said.


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