What's at stake in Macron's shock snap election call?

By Michel Rose

PARIS (Reuters) - In a high-risk gamble, President Emmanuel Macron said on Sunday he would dissolve France's parliament and call legislative elections later this month after he was trounced in European elections by Marine Le Pen's far-right party.

Here is what the parliamentary elections could mean for France.

WHAT IF MACRON LOSES THE PARLIAMENTARY ELECTIONS?

Macron's ruling Renaissance party has 169 lawmakers in the National Assembly, the biggest grouping in the 577-seat chamber. Le Pen's National Rally party is the largest party in opposition with 88 seats.

The president's shock move means there have been no recent voter surveys conducted on what a new National Assembly -- the lower house and most powerful legislative body in France -- might look like after fresh elections.

National Rally's strong showing in the European election pointed to voter discontent over issues such as immigration, crime and the cost of living. To win an outright majority in the French lower house, the party would need to see its number of lawmakers increase to 289.

Parliamentary elections are conducted over two rounds. These will be held on June 30 and July 7.

If the National Rally, or another party, wins a majority in parliament, Macron would be forced to name someone from their ranks to the position of prime minister. That prime minister would then be tasked with choosing cabinet ministers.

A so-called "cohabitation" situation would follow.

WHAT IS 'COHABITATION'?

France has known "cohabitation" periods before -- three in total since the founding of the Fifth Republic in 1958 -- when the president and his prime minister come from different political parties.

In this scenario, the president retains the lead role on defence as commander-in-chief and on foreign policy -- the constitution says he negotiates international treaties -- but he would lose the power to set domestic policy.

This last happened in 1997, when centre-right president Jacques Chirac dissolved parliament thinking he would win a stronger majority but unexpectedly lost to a left-wing coalition led by the Socialist party.

Socialist Lionel Jospin became prime minister for five years, during which time he passed the 35-hour working week.

WHAT COULD A COHABITATION WITH LE PEN'S PARTY LOOK LIKE

Jordan Bardella, Marine Le Pen's telegenic 28-year-old protege and leader of the National Rally, had previously been mooted as a possible prime minister should Le Pen become president in 2027.

Should a National Rally government be formed with its own working majority in parliament, it would be free to implement its domestic agenda.

Cohabitation can result in policy direction uncertainty if president and prime minister do not see eye to eye, unsettling markets. Bond spreads will indicate market sentiment.

Le Pen in her 2022 presidential manifesto advocated prioritising social housing access for French nationals, processing asylum requests outside of France and scrapping inheritance tax for middle class and low income families.

Whilst the president retains the lead on defence and military issues, the prime minister and government would have some say, leaving scope for sharp divisions in opinion and much depending on the personal dynamic between the two.

Macron is a staunch Europhile whilst Le Pen and her party dream of dismantling the EU from within.

There was tension for example between Chirac and Jospin on who led on EU policy, with the pair jostling for influence during EU summits.

A cohabitation between a pro-European president and a euro-sceptic nationalist party would be uncharted territory.

(Reporting by Michel Rose; editing by Richard Lough)