Eitan Urkowitz: France recently voted in its first round of its presidential elections where the people chose Emmanuel Macron and Marine Le Pen as its two candidates who will face off in a runoff. Joining me today is Nicolas Véron and Jacob Kirkegaard at the Peterson Institute. Thank you for joining me.

Nicolas Véron: Thank you.

Eitan Urkowitz: So Jacob, were there any surprises in the outcome of this election? And what should we expect in the runoff?

Jacob Kirkegaard: Well, I do think the surprise if you like of this election was that there was no surprise. The polls proved to be about right. Macron did build up a lead in the polls. So it was essentially the result was expected. Participation came in roughly as it usually has in France at about 80 percent.

And I think it sets up obviously to the very stark contrast in many ways for the second round between Marine Le Pen sort of runs on a Trumpean nationalist economic isolationist type, but at the same time in many ways very left wing on many welfare and social issues against a more mainstream pro-European integrationist Emmanuel Macron. So, yeah, we got what we expected.

Eitan Urkowitz: So Nicolas, Marine Le Pen got around 22 percent of the vote. Should we expect something comparable in the primary election between her and Macron? And should we also expect as high of a turnout rate?

Nicolas Véron: Well, the turnout might be a bit less than it has been in the first round because the result is very much expected. And I really expect Macron will win. So a lower turnout will probably mean a bit of all things equal a bit of a better result for Le Pen, but not boost her enough to win. So Macron is very much a frontrunner here. It could be a huge surprise if he doesn't make it if he doesn't become president.

And I think Jacob said it was expected. Well, maybe, but I think it's difficult to overestimate the extraordinary achievement that Macron's result as number one in the first round represent. This is somebody who comes out of nowhere completely outside of the party system, creates his own party, which he doesn't even call a party. He calls it a movement and comes ahead of everybody else in the main election of this country.

And I think, frankly, he did it out of not just luck. Even so, he was lucky. But an analysis of a very advanced stage of deterioration of the traditional party system in France and a complete realignment of landscape, which is no longer left versus right, but really open economy centrism versus closed economy radical nationalism, which seems to be a common theme of politics these days, but hadn't been embodied into party structure. So this realignment, I think, is structural. It's here to stay. And it happened extraordinarily quickly.

Eitan Urkowitz: Jacob, do you have any further thoughts about that and how this plays into the rest of the EU?

Jacob Kirkegaard: Well, I mean absolutely, you got to emphasize this was an extraordinarily political event. I mean the political entrepreneurship of Emmanuel Macron is extraordinary. I mean he's at 39 going to be president of a G7 country, have his hands of a nuclear trigger and all that. It's absolutely extraordinary.

But I do think the spillover to the European elections other Europeans, is that he ran a very pro-European campaign. He basically proves that you can do so replete with lots of EU flags next to the French flag during these rallies and things like that that you can do so and win. That hasn't happened, certainly not since the Brexit vote. So in that sense it's an antidote to this sort of degree or this perception of inevitable decline of the EU et cetera et cetera. He's young. He's pro-European. And he's a winner. That's a story that the EU hasn't had for a very long time.

Eitan Urkowitz: So Nicolas, the parliamentary elections in France are coming up in about a month and a half. So what should we expect there? And will Macron's party be receiving the same amount of support do you think that he got in the presidential election?

Nicolas Véron: So that's right. That's a real next step because pending a huge upset Macron will be president. And then the question is, can he govern well? Will he have a majority in Parliament with which he can govern? And is this majority just his party, En Marche, his movement? Or will he need a coalition with another party, and in that case which party in which terms? So lots of questions here.

It's a bit early days because the other two mainstream parties those which didn't make it to second round will have a big internal struggle as a result of not making it to the second round, which is frankly a huge failure for both of them. Even so it's not entirely symmetrical. So the central right we'll have a lot of in-fighting so is centrist left party which had veered more to the left recently, the socialist party. It's not even clear that they can survive in their present form. So there will be a lot of political upset before we get to the legislative election, which makes it more difficult to predict the election result.

My expectation and baseline scenario is that Macron either alone or in coalition with a reasonably friendly coalition partner will be able to govern and deliver on his platform. So we should expect basically policies compatible or consistent with what he has pledged during the campaign.

Eitan Urkowitz: So Jacob, the euro actually strengthened after this election. So how is the rest of Europe responding to the French elections?

Jacob Kirkegaard: Well, they're quickly basically sort of telling the French to rally behind Macron which is not entirely surprising. He is the pro-European candidate. And the fact that the euro and other economic indicators are if you want risk on or in positive territory now is that you have a very significant potential downside for not just the French but also the entire European project taken away by this election result.

And again, we can all start talking about the future. Eventually, Italy has to vote and a bunch of other things. But this does represent, I would argue, turning of a page of the—I mean we have now truly moved beyond the Brexit vote in terms of European political discourse.

Eitan Urkowitz: Thank you, Jacob. Thank you, Nicolas.

Nicolas Véron: Thank you.