Long-Term Forecasts and Court Verdicts: The Latest in British and French Politics

Editors’ Note: MarketMinder is politically agnostic. We prefer no party nor any politician and assess developments for their potential market implications only.

While US midterm primaries continue rolling along, political winds are also stirring overseas. In Britain, a new deficit forecast is whipping up tax hike fears as presumptive new Prime Minister Andy Burnham prepares to take office.^[i] Across the English Channel, a French appellate court reduced National Rally (NR) stalwart Marine Le Pen’s ban on running for office—freeing up a 2027 presidential run for the party’s spiritual leader. While neither appears to be a massive game changer for markets, both have nuggets worth considering from an investment standpoint. Let us dive in.

UK Deficit Forecast Spurs Policy Speculation

Absent a challenger, former Manchester Mayor Andy Burnham will become UK Prime Minister as soon as July 20. Yet before he has even loaded up the moving van to 10 Downing Street, his plate is full of perceived fiscal policy headaches, much like his predecessors. The latest came from the nonpartisan budget watchdog Office for Budget Responsibility (OBR), which issued its annual Fiscal Sustainability Report this week. And buried in these 148 pages of 50-year debt forecasts was a warning that His Majesty’s Treasury must cut the projected federal budget deficit by 3.8% of GDP by fiscal year 2031/2032 to keep Britain’s debt-to-GDP at 95%. Pundits did the maths and now argue that translates to £120 billion of new annual tax revenue or spending cuts.^[ii]

The OBR pins this primarily on the government’s State Pension triple lock, a 2010 law requiring the annual cost-of-living adjustment to match whichever is highest of Consumer Price Index inflation, average national earnings growth or 2.5%. Estimates suggest this adds roughly £130 – 140 billion in annual public spending, so the OBR’s admonition amounts to killing the triple lock, cutting other spending or raising taxes to keep debt-to-GDP at bay.^[iii] And given Burnham’s policy plans (and the Labour Party’s reputation) point to steady public spending and investment, headlines presume big tax rises are on the way.

This is all too hasty, in our view. For one, the OBR’s report is yet another long-term forecast relying on assumptions about economic growth, demographics and financial markets. The 50-year (50!) projection ignores myriad factors—economic ups and downs, policy changes, global trends, new innovations, you name it—that could (and will likely) change between then and now. Oh, and that targeted 95% debt-to-GDP ratio? It is completely arbitrary. There is nothing magical about 95%, 100%, 105%, 150% or even 60% rendering debt sustainable. It is all about whether interest payments remain affordable, which no report can predict since no one can forecast interest rates 50 years out, to say nothing of economic activity that sways the tax base.

More importantly, take a step back and consider the political realities here. The triple lock has been in politicians’ crosshairs for a decade, and while all agree it needs reform, none agree on what that entails, and none want to risk alienating a key voting bloc. Consider what happened in 2024, when current Chancellor of the Exchequer Rachel Reeves and outgoing PM Keir Starmer tried to means-test the winter fuel allowance, which subsidizes pensioners’ home heating costs. Even axing the allowance for households with annual incomes over £35,000 spurred such massive backlash that they were forced to U-turn a year later. Their popularity never recovered.

This also generally isn’t the kind of thing any politician would jump to now, five years ahead of the OBR’s (arbitrary) timing suggestion. Labour’s 2024 election manifesto committed to keeping the triple lock. Britain’s next general election is due by August 2029, so to the extent state pension changes are actually needed, each party will pick their approach, campaign on it and win voter backing. There is a long time between now and then, so there is no way to know what will be in any party’s manifesto—never mind which stands the highest likelihood of passing. Plus, the UK economy could even grow fast enough before August 2029 that all of these worries become moot.

Ditto for austerity measures. Burnham already committed to major aspects of Labour’s manifesto, including pledging not to raise income, value-added or employee payroll taxes. He (presumably) wants to get re-elected, so immediately veering from these promises probably wouldn’t help. And as for spending cuts, he just outlined a 10-year economic plan that hinges on public investment.^[iv] U-turning on that because of a single forecast would be a political own goal. In concert, we chalk all of this up to political noise, unlikely to result in sweeping policy surprises in the 3 – 30 month window stocks care about.

Le Pen’s Ban Shortened, Teeing Up Presidential Run

Meanwhile, across the Channel, investors got a little more clarity on France’s presidential ballot next year after a Parisian appeals court reduced Marine Le Pen’s ban on running for office. For context, Le Pen was convicted of embezzling EU funds into NR party activities in March 2025—earning her a five-year ban from running for French office.^[v] She appealed this conviction. And while the appellate court upheld the guilty verdict, it effectively ended her ban by reducing it to 15 months (technically, 45 months, but 30 were suspended). Similarly, she was sentenced to a three-year jail term, but two were suspended and one will be accomplished via wearing an electronic ankle bracelet. She is further appealing that part.

After the ruling, Le Pen confirmed her 2027 presidential campaign with long-time protégé and current NR president, Jordan Bardella, who will become prime minister if she wins. Given the NR’s current poll leadership and other French parties’ long-running struggles, some suggest Le Pen will win the presidency in 2027, then call a snap legislative election that the NR will sweep—ensuring legislative dominance to enact its agenda.

But this, too, seems hasty. First and foremost, polls this far out aren’t predictive. Nobody knows who will rival Le Pen, how they will campaign or how the public will react. And even if Le Pen does get an Elysée and legislative sweep, it isn’t clear this means vast policy change—for good or ill—follows. Today’s speculation overlooks the NR’s intraparty divide, which you can see in Bardella and Le Pen’s divergent economic views. While the two align on issues like immigration, Bardella has historically championed free‑market policies while Le Pen pushes a more social‑sovereigntist mix of redistribution and economic nationalism.

Consider their opposing views on France’s proposed windfall profits tax on energy companies. Le Pen backed it as means to claw back crisis‑driven profits to finance fuel tax cuts and consumers’ purchasing power while Bardella opposed it, questioning if France’s priority was “to invent taxes and duties.”^[vi] They also broadly disagree on France’s pension system and taxing big businesses.^[vii] This divide creates a weird tug of war between what people would traditionally call right-leaning and left-leaning economic policy (a line getting blurred globally lately).

Given they represent factions within the party, it is entirely possible intraparty gridlock would stall legislation if the NR wins. And given pundits’ big fears of an NR government running up deficits and chilling foreign investment, that would mean reality going better than expectations—though politics is, of course, just one of stocks’ drivers.

At any rate, this isn’t a 2026 issue for French stocks—it is too far out and unknowable. While they are underperforming broader markets this year, this is less about local politics and more about their relatively heavy weightings toward cyclical and defensive sectors (i.e., Financials, Consumer Discretionary, Consumer Staples), which have lagged tied to war fears, primarily.^[viii] We suspect that, as those fears recede further, such lag should reverse.