Political uncertainty freezes borrowers and investors

“We are hit by a lot of political and economic issues,” admitted Julien Langlade, president of the Cafpi credit broker network, at a press conference at the start of the week.

Is the French political context likely to modify your property purchase plans? His company asked the question to a thousand customers between June 11 and 23, 2024, just after the announcement of the dissolution of the National Assembly by Emmanuel Macron and in the middle of the legislative campaign.

More than one in five respondents said they were discouraged, four times more than those who felt encouraged, with the majority of respondents remaining neutral or not commenting.

A scenario of a slowdown in the granting of credits "is even more likely in France due to the combined effect of new political realities and the inevitable wait-and-see attitude", wrote Nicolas Hardy of the rating agency Scope ratings.

The market didn't really need that. At its lowest in March for ten years, the total amount of real estate loans excluding renegotiations started to rise again in April, before already running out of steam in May, according to data published Friday by the Bank of France.

Retail banks are, however, counting on home loans to move forward and put an end to the slow agony linked to the rise in interest rates, which began in the summer of 2022.

This product is key to conquest. The purchase of a residence is in fact a rare opportunity in the life of a customer to change banks and repatriate their accounts, savings products, etc. to their new creditor.

Urgent to wait

“It’s a difficult time for economic agents because we are in a period of uncertainty,” Daniel Dadoun, partner at the Kearney consulting firm, told AFP.

“Everyone was surprised by the dissolution,” he adds. Since then, “there has been a bit of a wait-and-see attitude” at all levels.

On the investment side, companies are opting for caution. The current climate is an "invitation to even more prudence in the management of the company for the moment", declared in mid-June to his shareholders the boss of the payment specialist Worldline, Gilles Grapinet.

Enough to limit the activity of consulting firms, service providers dependent on the economic health of their clients, but also on the mergers and acquisitions market.

“The lack of visibility could freeze mergers and acquisitions” for some time, estimates Ludovic Subran, chief economist at Allianz, if the uncertainty on the fiscal and commercial level continues.

The timing is bad for French specialists in mergers and acquisitions, such as the Franco-American investment bank Lazard, which fell into the red last year and whose Paris office has suffered several departures.

“We anticipate that institutional money will remain in France but that it will be difficult to bring in foreign capital,” a source within a management company told AFP.

Questioning

The last niche in which economic agents are quick to move quickly is ultimately their investments.

The Stock Exchange reacted strongly on the Monday following the announcement of the dissolution and the Monday after the first round, downwards in the first case and upwards in the second.

Since then, "savers are a little bit in 'wait and see' mode, we are waiting to see how it will go," Félix Rivierre, of the Goodvest investment platform, explains to AFP.

“There are questions at the moment” from wealthy customers, admits a regional manager of a large bank, but no panic, according to him.

A Parisian business lawyer, for his part, sees a growing interest in Switzerland, the United Kingdom and the United States for some of his clients.

Illustrative image of the article via Depositphotos.com.