(Bloomberg) — Marine Le Pen’s National Rally was on track to dominate the first round of France’s legislative election, dealing a major blow to President Emmanuel Macron and setting the stage for a far-right party to control the country’s government for the first time in its modern history.

The National Rally was projected to get between 33% and 34.2% of the vote, according to initial projections from four polling companies on Sunday. The left-wing New Popular Front coalition was set to get between 28.5% and 29.6% and Macron’s centrist alliance between 21.5% and 22.4%.

Even though Macron’s presidency isn’t formally at stake – and he’s said he has no plans to resign – Sunday’s result indicates he’ll likely have to share governing responsibilities with Le Pen’s group, which opposes most of his priorities, from migration and pension reform to strengthening the European Union.

The focus now will turn to whether the National Rally and its president, Jordan Bardella, can garner enough support in the second round of voting next Sunday to get an absolute majority in the National Assembly, which would allow it to easily pass legislation and bat down attempts to bring down the government. Or if it will end up in a minority government, in which case its power would be greatly checked. 

Macron released a statement at the same time as the initial results came out, calling for “a broad, clearly democratic and republican alliance for the second round.”

Markets have been in turmoil since Macron called the snap election on June 9, leading to the worst bond rout since the sovereign debt crisis and erasing nearly $200 billion from the value of French stocks. The extra yield investors demand to hold 10-year French debt over similar German government bonds rose to 86 basis points on Friday, the most since 2012. 

A National Rally victory would set up Bardella to become prime minister in a power-sharing arrangement called cohabitation — when the president and premier are from different parties. This composition has only occurred three times since France’s fifth republic was established in 1958. Bardella has said he would only accept the position if his party won an absolute majority. 

During the two-week campaign, Bardella sought to assuage voters by saying the National Rally would take a responsible approach to economic policy, but offered little in the way of detail. Some of his proposals include cutting taxes on electricity, gas and fuel and undoing Macron’s pension reform that boosted the retirement age.

And while the National Rally no longer supports leaving the common currency — a position that’s proven deeply unpopular — it has put forward several proposals that would cause problems with the European Union, such as a plan to renegotiate the bloc’s electricity market pricing and reducing the amount of money France pays into the EU budget. 

European leaders have been keeping a close eye on the election, which could have an enormous impact on sensitive EU policies that will be negotiated in the coming months, particularly related to Ukraine and defense spending. 

“I’m worried about the elections in France, I want to say that explicitly,” Scholz said in an interview with ARD public broadcaster a week ago. “I hope that parties that are not Le Pen, to put it that way, are successful in the election. But that is for the French people to decide.”

Macron called the snap legislative ballot June 9, after the National Rally got twice as many votes as his centrist coalition in the European Parliament election. Macron argued that he couldn’t ignore the results while also warning that “the rise of nationalists and demagogues” was threatening France and Europe. 

That ballot showed far-right parties gaining ground across the entire bloc, placing among the top three most popular political groups in nearly half of the 27 EU countries. Among the winners was Italian Prime Minister Giorgia Meloni’s right-wing Brothers of Italy, which got nearly 29% of the vote. And Germany’s anti-immigrant Alternative for Germany finished second ahead of Scholz’s Social Democrats.

The election on Sunday is forcing voters to make up their minds about whether they prefer Macron’s pro-business, pro-Europe, pro-Ukraine vision for France or Le Pen’s agenda of dramatically cutting migration, stepping back from European Union rules and undoing some of Macron’s pension reforms.

The president’s party and its allies lost their absolute majority in the National Assembly in the legislative ballot that followed his reelection for a second five-year term in 2022. Since then he has attempted with mixed success to get support from the Republicans to pass legislation, otherwise relying on decrees that bypass a vote.

Macron’s government and the National Rally have already started arguing over who would control certain areas of policy if they ended up in a government together. Le Pen last week pushed back against Macron’s plan to nominate Thierry Breton for another term at the European Commission, the EU’s executive arm, arguing that the prime minister is responsible for that decision. 

And while the French constitution declares that the president heads the army, Le Pen said the title of “army chief” was merely honorific. 

Sunday’s result shows the extent to which Le Pen has transformed the National Rally, a party with fascist roots co-founded by her father, Jean-Marie Le Pen, and Pierre Bousquet, a former Waffen SS member. The party, originally called the National Front, didn’t hide its racist and antisemitic views and Jean-Marie Le Pen was convicted of denying crimes against humanity for describing the Nazi gas chambers as “a detail” of history. 

(Updates with Macron statement in the fifth paragraph, background throughout.)

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