Early Lagarde exit would prevent far-right win in France complicating ECB appointment

DCM Editorial Summary: This story has been independently rewritten and summarised for DCM readers to highlight key developments relevant to the region. Original reporting by Irish Times, click this post to read the original article.

It has always seemed likely that the appointment of the next head of the European Central Bank (ECB) would be sorted as part of some grand bargain between several big EU powers, drawing a host of other jobs into the mix with it.

There has been speculation for a while that ECB president, Christine Lagarde, whose term ends in October 2027, might go early.

The Financial Times reported on Wednesday that Lagarde is expected to depart before her term ends next year, citing a source familiar with the French politician’s thinking.

A spokeswoman for the ECB said: “President Lagarde is totally focused on her mission and has not taken any decision regarding the end of her term”.

The report is a market moving story, one the Financial Times would have to be very confident on its sourcing to run. It has been interpreted in Brussels as a signal from Lagarde or her circle.

Departing before her eight-year ECB term concludes would allow a deal on her replacement to be struck before crucial French presidential elections next April.

Everyone is keenly aware that Marine Le Pen’s far-right National Rally stands a real chance of winning the French presidency for the first time, either with Le Pen or her protege Jordan Bardella on the ballot. That would have massive ramifications for European politics.

French president Emmanuel Macron, who cannot stand again after two consecutive terms, has been busying tying up several domestic appointments in his final year in the Élysée.

Who will take over as ECB president, one of the most important EU jobs, is decided by the bloc’s 27 leaders.

Germany, France and Spain are likely to put their hands up for one of their own to land the position. In the mix will be a number of roles, not just ECB president.

Former Irish central bank governor Philip Lane’s time as ECB chief economist ends in May 2027. Another ECB board member, Isabel Schnabel, finishes that December.

Antonio Costa and Roberta Metsola, presidents of the European Council and European Parliament, will wrap their two-and-a-half year stints in the first half of 2027. Both of them will be looking to stay on.

Lagarde was previously managing director of the International Monetary Fund and, before that, French finance minister.

Her elevation to the ECB job came as a result of a Franco-German deal that saw Ursula von der Leyen, then a little known defence minister, put forward to run the European Commission in 2019. A number of other key EU roles were settled at the same time.

The French government will understand that hanging on to the top ECB job is unlikely. They may have their eye on the chief economist position in Frankfurt.

German chancellor Friedrich Merz’s prospects of securing the gig for a German is complicated by the fact the current commission president, von der Leyen, is German.

Spain is shaping up to make a big push for the ECB presidency, while a Dutch candidate could be a dark horse.

It was telling that none of the big European countries nominated someone for ECB vice-president, when the process of filling that role started recently.

Candidates included Finland’s Olli Rehn, Croatia’s central bank governor Boris Vujčić and other names from Portugal, Lithuania, Latvia and Estonia. The Croatian got the nod.

The absence of any challenger from France, Germany and Spain was taken as a clear sign those governments were keeping their powder dry for the bigger jostle to come.