HERE’s an important story that didn’t make it to the main pages of the UK media – not an unusual occurrence, of course. In the run-up to the first round of the French presidential elections on April 23, global financial markets went into disaster mode, preparing for a meltdown of the euro if Marine Le Pen showed any signs of entering the Elysee Palace.

Of course, the euro is a perfectly sound currency – the European Central Bank is having to print gazillions of the stuff to keep its value from soaring. That’s not the point. The international financial world is a vast gambling casino and in April it was preparing to bet the farm on destabilising the euro, amid fears that a Le Pen Frexit would trigger the whole collapse of the European Union.

But on April 23 the Le Pen challenge stalled. She came second with 21 per cent of the vote, beaten by vacuous newcomer Emmanuel Macron on 24 per cent. The markets breathed a collective sigh of relief, concluding she was toast in the second round. It appears they were correct: exit polls last night suggested Macron won 65 per cent of those votes.

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Of course, the markets (like the bookies they are) happily pocketed the cash that had been laid out to cover a surprise Le Pen victory. And the difference in interest-rate costs between French government bonds and German ones dropped to just 40 basis points; ie, where they were before Le Pen’s populist challenge to the EU.

So everyone – by which I mean the French establishment and the global cabal of hedge funds and investment banks that rule our lives – can now breathe a sigh of relief? Not on your political nelly. The truth is that whoever enters the Elysee Palace, as President of the ailing and doddery Fifth Republic, is going to have their work cut out. The French economy remains at crisis point. Just as importantly, so does the French political system. Next flashpoint: the elections to the French Parliament, which will determine what the new occupant of the Elysee Palace can or can’t do by way of reforms.

France remains unstable, if not ungovernable in terms of deciding its future strategic direction. The true interpretation of the two rounds of presidential voting is that the French nation is split down the middle when it comes to economic reform, the future of the EU, dealing with Putin’s Mafioso politics, or coping with the stresses and strains of the global economy. Because the country remains so divided, the new president will have very limited room for manoeuvre. Which means we will be hearing more from the vultures in the financial markets, as they take bets on the French economy.

In fact, France is split between the neo-liberalism of Macron and a left that has still to get its act together. Take a closer look at the election results from the first round of presidential voting. True, Macron and Le Pen came top. But the maverick leftist Jean-Luc Mélenchon took nearly 20 per cent of the vote while Benoît Hamon, the official Socialist Party candidate (think a Gallic Jeremy Corbyn), got another six per cent. So the combined, mainstream left actually outpolled Le Pen. Had the Socialists pulled out in favour of Mélenchon, he would have been in yesterday’s run-off with Emmanuel Macron, the darling of the Establishment right.

Parliamentary elections now take place in France — in two rounds — on June 11 and 18. On current polling data, Macron’s new (and political nebulous) En Marche! party is predicted to make major gains. The mainstream right-wing Republicans (nominally led by failed presidential hopeful François Fillon) are also slated to do well. The Socialists are facing an electoral meltdown, like the UK Labour Party. On the extremes, Mélenchon’s Left Front and Le Pen’s National Front will return a modest number of deputies.

Of course, the actual outcomes will depend on any deals done between the first and second rounds, where parties stand down in favour of each other. A deal between the traditional Socialists and Mélenchon, if one proved possible, would give the left many more deputies. At this point, it looks like En Marche! could get 240 to 286 seats in the 577-seat Chamber of Deputies. But that is still less than a majority, which could be a big headache for a President Macron.

This is because the French prime minister is chosen by a vote in parliament. So the Presidential party needs to win a majority of 289 or more or be forced make deals with other parties. Clearly a deal could be made with Fillion’s Republicans, who emerged out of the old Gaullist movement. But some in the Republicans might baulk at embracing Macron’s avowed neo-liberal agenda and the destruction of the French welfare state it implies. Equally, any move by Macron to enlist support from the right of the Socialist Party — he was, after all, a minister under Socialist President Hollande – could shatter his chances of building bridges to the Republicans.

Meanwhile, the French anti-capitalist left has been reinvigorated by Jean-Luc Mélenchon’s success in the first round of the presidential election. He even came top of the poll in Marseille, traditionally a bastion of support for Le Pen’s National Front. Even if the left finds it difficult to win a lot of parliamentary seats, the Mélenchon factor is bound to embolden the French trades unions to resist Macron’s austerity agenda and labour market reforms.

Which brings us back to the global financial markets. They are clearly betting that a Macron presidency can turn France into another neo-liberal colony. Macron himself is — surprise, surprise! — a former investment banker with Rothschild and was President Hollande’s chief hatchet man in pressing neo-liberal reforms on the French economy.

Macron’s weakness is that his political programme is out of date. He assumes the EU project of turning Europe into a free-market bastion through deregulation is still on the cards. But Trump, Brexit and the euro crisis put paid to that vision. Above all, selfish Germany has used the euro and Brussels-enforced austerity to turn southern and eastern Europe into an internal colony supplying cheap components for its export industries. Result: the Franco-German alliance that made the EU has been shattered.

The real solution to France’s woes is not a Frexit. That is as big a fantasy as Theresa May’s notion of the UK surviving alone in the protectionist global economy emerging in the wake of Trump’s America First policy or China’s “One Belt, One Road” plan. What we need is a root-and-branch, progressive reform of the EU. This is where the Mélenchon campaign made its popular breakthrough in France. He put forward a detailed plan to renegotiate the Treaty of Lisbon that has turned the EU into a neo-liberal exploitation machine.

We see the same problem posed in the UK. It is difficult simply to counterpose EU membership as is to the obvious dangers from a hard Brexit, as long as Brussels and Germany embrace an extreme form of austerity. Instead, we need to demand that the neoliberal model of the EU is reformed. The French left may yet force Europe to accept that challenge. That is why events in France are crucial.