Marine Le Pen 2027: Is the Euro Facing Its Biggest Threat Yet?

The debate about abandoning the euro regularly resurfaces in France. With new presidential elections scheduled for 2027, the victory of the National Rally could lead to this withdrawal. The French could end up ruined as a result.

The failures of the franc in the 1980s

Supporters of Frexit often forget the difficulties France encountered before the euro. During the 1980s, the country engaged in successive competitive devaluations against the German mark, much like Javier Milei’s Argentina does today. In 1981, the franc was devalued by 3%, then by 5.75% in 1982, 8% in 1983, and another 3% in 1986.

This strategy proved catastrophic. Contrary to its goals, these devaluations fueled rampant inflation and deepened the trade deficit with Germany. Consequently, investors fled massively, preferring to place their capital in more stable currencies like the mark.

France thus lost all credibility on financial markets. The Bank of France was regarded as a second-tier institution, incapable of guaranteeing price stability. These repeated failures eventually pushed French authorities to abandon this approach and align with the German strong currency model.

The liberal construction behind the euro

The euro is based on rigorous academic work conducted by several Nobel Prize-winning economists. The public choice theory by James Buchanan and Gordon Tullock demonstrates that politicians primarily act to get re-elected. They are therefore tempted to adopt short-term populist policies, especially in monetary matters.

This vision justifies central bank independence as a safeguard against opportunistic abuses. A respected central bank must follow stable and predictable rules, not manipulable by political power.

Milton Friedman complemented this approach by demonstrating that inflation is always a monetary phenomenon. Thus, only rigorous control of money creation can sustainably fight inflation. These liberal economists directly inspired the European Central Bank model with its clear mandate of price stability.

The concrete but little-known advantages of the euro

The euro has brought unprecedented monetary stability to Europe. Currency crises that regularly shook European currencies have disappeared. Gone are speculative attacks like George Soros’s against the British pound in 1992, which cost the United Kingdom more than one billion dollars.

This stability has translated into historically low interest rates. Southern European countries benefited from exceptional financing conditions due to the ECB’s credibility. Furthermore, the euro has facilitated European trade integration: 65% of French foreign trade today is with eurozone countries.

Moreover, the euro has become the world’s second reserve currency after the dollar. This position offers Europe a tool of collective sovereignty vis-à-vis the great powers. The euro also serves as a monetary shield for fragile countries that, without this protection, would have seen their currencies collapse during crises.

The euro’s weaknesses

Economist Robert Mundell theorized the impossible trinity, which explains the main weaknesses of the euro. You cannot simultaneously have a fixed exchange rate, an autonomous monetary policy, and free capital movement.

The eurozone chose a common currency and free movement of capital, sacrificing national monetary policy. This situation poses problems during asymmetric shocks: a real estate crisis in Spain or a budget crisis in Greece can no longer be addressed through national monetary adjustments.

The lack of a fiscal union is the main structural weakness. Unlike the United States, there is no automatic solidarity mechanism between member states. Countries in difficulty can only rely on their national fiscal policy, creating tensions between northern and southern Europe.

Towards a monetary apocalypse?

Leaving the euro would not solve the fundamental problems of the French economy. On the contrary, this decision would likely cause a surge in interest rates, as was the case in the 1980s. Investors would lose confidence in the new French currency, triggering a massive capital flight.

The real French challenges are structural: lack of competitiveness, labor market rigidities, demographic aging. These problems existed before the euro and would persist after its disappearance. The euro is not the cause of these difficulties, but rather a safeguard preventing politicians from masking these weaknesses through irresponsible monetary policies.

Essential structural reforms require improving productivity, flexibilizing the labor market, and making massive investments in innovation. These transformations need political courage and a long-term vision—qualities often missing from the French public debate.

The euro is certainly not perfect and suffers from significant structural flaws. However, its destruction would be more costly than its reform. Rather than playing with fire by leaving the euro, France should focus on its internal reforms while working towards a more integrated and ambitious Europe. Another promising strategy would be to start building a bitcoin reserve, inspired by certain American states.