French Prime Minister Michel Barnier left after the results of the first vote of no confidence in the French government proposed by the left-wing party “New Popular Front” alliance. Special Provisions) to push the budget bill through the National Assembly without a vote by members at the National Assembly held in Paris, France, on December 4, 2024.
Sarah Messonnier | Reuters
The collapse of French Prime Minister Michel Barnier’s government on Wednesday can be seen as the culmination of months of political turmoil in France, with left-wing and far-right opposition parties unlikely to form an alliance to overthrow the government in a vote of no confidence.
However, analysts and economists said that the end of Barnier’s short-lived premiership and government did not mark the end of Paris’ problems, but ushered in a new period of political turmoil and uncertainty in Paris.
Barnier resigned on Thursday morning, hours after last night’s vote in which 331 MPs from the left-wing New Popular Front (NFP) coalition and the far-right National Rally (RN) took part Support a motion of no confidence in his government.
The vote, which came after weeks of debate over plans for a 2025 budget of tax hikes and public spending cuts, was not a close call, with far more deputies backing the motion than needed to pass it in parliament and the National Assembly. of 288 representatives. This is the first time since 1962 that a French government has been deposed.
National Rally President Marine Le Pen (right) during a no-confidence debate at the National Assembly in Paris, France, Wednesday, December 4, 2024.
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Barnier’s ouster is the culmination of a political crisis that began earlier this year with President Macron’s decision to call snap congressional elections Ironically, this is an attempt to solidify the power base of his centrist coalition in the National Assembly.
Ultimately, the move backfired, and Macron got what he didn’t want from the June and July elections: his own center’s power base was significantly weakened, and the National Assembly was divided between the powerful left and right. two.
President Macron is now under pressure to find a successor as prime minister quickly, Reuters reports On Thursday, he hoped to have someone in place as soon as possible on Saturday, when U.S. President-elect Donald Trump and other dignitaries gather in Paris for the reopening of Notre Dame Cathedral.
The next candidate may face the same problem as Barnier, with the left and right expected to harass the new government with their own 2025 budget agenda, just as they did with Barnier.
“France is… entering a new era of political instability,” Charlotte de Montpellier, senior economist for France and Switzerland at ING, said in a note late Wednesday.
“President Macron will have to appoint a new prime minister, he will have to form a new government. The National Assembly is highly polarized and divided into three main camps – left, center right and far right – and the search for a new prime minister will not Confronting a motion of no confidence directly would be a very difficult task,” she said.
“France could therefore be without a government for weeks or even months,” she added.
Who might become the next prime minister?
There has been speculation that Macron could nominate his ally, Defense Minister Sébastien Lecornu, or veteran centrist leader François Bayrou, president of the Movement for Democratic Party in France. assume this position. Other possible candidates mentioned include Interior Minister Bruno Reitello and former Prime Minister Bernard Cazeneuve.
Mujtaba Rahman, managing director of Europe at Eurasia Group, said whoever inherits the role will likely not last long and will not be expected to do so.
“His (no ‘she’ in the frame) first order of business will be to push for a rollover of the 2024 budget. His second order of business will be to try to revive Barnier’s 2025 deficit-reduction budget through amendments that The case may appeal — arguably an impossible task — to the left or the far right, or both,” Rahman said in a report late Wednesday.
French Prime Minister Michel Barnier stood among government members and was applauded by ministers and Macronist MPs.
Amaury Konu | AFP | Getty Images
Analysts have speculated that Macron will choose Barnier’s successor within days, but noted that the candidate’s premiership may actually be a stopgap until new parliamentary elections next July, which is 12 months away. One year after the last vote.
“France’s deepest and most complex political crisis in sixty years will break out next year,” Lachman said. He warned that “the confrontation between three mutually hateful forces in the National Assembly will continue for months without an early resolution.” hope.”
The Eurasia Group’s new base case is that new parliamentary elections will be inevitable next year, with a 75% chance.
As things stand, analysts believe that France’s main political groups are likely to agree on an interim budget that will simply extend the 2024 budget into next year. This will prevent France from “closing down” during the New Year period if it cannot meet its financial obligations.
Delaying the budget may avert a looming crisis, but it also postpones the urgent need to solve France’s fiscal problems, with the budget deficit expected to reach 6.1% of GDP in 2024 and expected to rise further if measures are not taken to rein in spending.
The market is currently calm
Investors appear to have accepted the collapse of the French government as a “fait accompli”. French benchmark 10-year bond yield Thursday was relatively steady at around 2.9% – a far cry from a week ago When France’s borrowing costs reach the same level as debt-ridden Greece –as well as CAC 40 It will be in positive territory at noon Thursday.
Chris Beauchamp, chief market analyst at IG Markets, commented on Thursday that markets may not remain calm for long, especially if opposition calls for President Macron to resign and hold early presidential elections come true, although this Considered an unlikely scenario.
“A new caretaker will be appointed soon, but there seems to be no way out of the budget impasse. Markets remain calm for now, but if the far left and far right eventually succeed in ousting Macron as president, then we can foresee a new trend in the market. Wheel of uneasiness.
A cafe bar near the Eiffel Tower on October 5, 2020 in Paris, France, on the last day before new Covid-19 restrictions force bars and cafes in the capital to close for at least two weeks.
Kieran Ridley | Getty Images News | Getty Images
ING’s de Montpellier noted that the 2024 budget is likely to be extended into 2025, meaning fiscal policy will be less restrictive than planned in terms of tax revenue and consistent with plans for public spending.
“This means that the Barnier government’s goal of returning the deficit to about 5% of GDP in 2025 has been unable to be achieved. The public deficit will remain at a high level, possibly reaching around 5.5% of GDP, and the debt will continue to grow. The next government – — whoever it is — will have a harder job getting public finances back on track,” she warned.
“In addition, the collapse of the government means political uncertainty will persist and continue to affect business and consumer confidence, although budgetary policies may become slightly less restrictive.”
ING expects the French economy to grow by 0.6% in 2025, compared with 1.1% in 2024. Possibility of correction”.
