German firms on edge as French poll risks roiling the economy

German companies are looking nervously on as France goes to the polls on Sunday in the first round of snap parliamentary elections that could deliver a blow to the country's political centre, reported dpa.

"When analysing the economic policy announcements of the right and the left, German and French companies have come to the same conclusion: France's attractiveness would suffer," said Patrick Brandmaier, managing director of the Franco-German Chamber of Industry and Commerce, in Paris.

Marine Le Pen's far-right nationalist National Rally (RN) has seen its standing strengthen in the final voter surveys ahead of the election, which will determine the balance of power in the National Assembly. The election will be held in two rounds.

President Emmanuel Macron called the poll nearly three weeks ago after the stinging defeat of his centrists to the far-right in the European Parliament elections, a historic result that reverberated far beyond France. The risky move could put the RN in power for the first time.

Macron's decision rattled financial markets and raised fresh concerns about France's fiscal challenges.

Investors are worried that wins by either the RN or the leftist New Popular Front (NFP) alliance, which is also polling strong, could threaten the French economy, the second-biggest in the European Union after Germany.

Brandmaier said the possibility of sharp increases in government spending by Paris, which would likely further rock the market, has spooked companies already concerned about the sustainability of France's fiscal path.

Rising premiums on French government bonds would put even more pressure on the already strained French state budget, analysts have pointed out in recent days.

Brandmaier said the potential for the far-left or far-right to roll back business-friendly reforms implemented under Macron's presidency, plus the likely increase in taxes, also had German businesses on edge.

"Certain announcements about moving away from Europe or questioning free trade agreements" were also playing into the the fears, he said.

Employers would likely wait and see how the situation develops before taking on new staff, explained Brandmaier.

He noted that in the event of a victory for the far right, there would also be the question of the fate of immigrant workers, who are essential for the functioning of certain sectors such as construction.

Germany is the largest European investor in France and France is the second most important export market for German companies after the United States.

"Less favourable conditions and an economic slowdown in France would therefore also have a negative impact on German companies," stressed Brandmaier.

Despite the anxiety, Brandmaier said that German businesses would take a cautious approach to the election outcome.

"In the short term, we do not expect any major changes or structuring decisions from German companies: A wait-and-see attitude prevails," said the chamber of commerce boss.

"Should competitive conditions and the economic outlook in France deteriorate, this would have an impact on investment, growth and employment in the medium- to long-term."