French Stocks Tumble to Worst Week in Two Years Over Election Fears

A growing realization that President Emmanuel Macron’s decision to hold snap elections in France may backfire sent the French stock market tumbling on Friday to its lowest level in two years, and prompted warnings from the French finance minister that the economy risks stumbling into a financial crisis.

Amid growing signs that Marine Le Pen’s far-right party may be ushered to the brink of power, France’s benchmark stock index, the CAC 40, slumped 2.7 percent. The losses capped a weeklong losing streak that sent shares down more than 6 percent, wiping out all the bourse’s gains since the start of the year.

Among the hardest hit stocks were France’s biggest banks, including BNP Paribas and Société Générale, which hold hefty amounts of French sovereign debt.

Equally worrisome, the risk premium that investors demand to hold French government bonds over Germany’s, a eurozone benchmark, rose to the highest since 2017, the biggest weekly jump since 2012, when the euro debt crisis was underway.

Bruno Le Maire, the finance minister, said on Friday that France “would face guaranteed economic collapse” if voters allowed parties on the extreme right or left to gain power. Mr. Le Maire, who is essentially campaigning these days for Mr. Macron and may lose his spot in the next government, cited what he said were free-spending populist economic platforms that could tip the already heavily indebted country further into debt.

If the far right wins a majority and establishes its populist economic program, with an estimated price tag of 100 billion euros, economists said France could face financial turmoil as Britain did two years ago. In 2022, Prime Minister Liz Truss ignited a financial market meltdown with outsize tax cuts and spending increases that risked raising the country’s deficit.