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France’s government stood on the brink of collapse on Monday, as Prime Minister Michel Barnier dared a fractious parliament to bring down his administration over its tax and spending plans.
Opposition parties to the left and right of Barnier said on Monday they would vote to remove his minority government after he vowed to force through draft budget measures without parliamentary approval.
The political crisis that has gripped France comes just weeks after the implosion of Olaf Scholz’s German coalition, leaving the EU’s two most powerful states in limbo.
“We have arrived at a moment of truth,” Barnier said on Monday. “It is now up to members of the parliament to decide if our country gets a responsible, indispensable budget or if we step into uncharted territory.”
In a bid to push through part of a €60bn package of tax rises and spending cuts, he activated article 49.3 of the French constitution, which allows the government to bypass parliament to pass a law, but only if it can survive a no-confidence vote.
Shortly after the move, Marine Le Pen confirmed that her far-right Rassemblement National party would vote to remove Barnier, while the far-left France Unbowed party also said it would file a no-confidence motion.
If Barnier’s government falls in such a vote, which could take place as early as Wednesday, it would make him France’s shortest-serving premier since the Fifth Republic was established in 1958.
Emmanuel Macron named Barnier to the post in September, after the president’s gamble on a summer election backfired, leaving his own centrist coalition far short of a majority in the National Assembly.
Macron would have to name another prime minister if the motion of no confidence succeeds, because no further parliamentary election can be held until 12 months after July’s poll.
“Investors are worried that France will be rudderless should the government fall in [a] no-confidence vote,” said Chris Turner, global head of markets at ING. He added that the dynamic was “adding to the Eurozone malaise”.
France’s bond market has been hit by the political turmoil over the past two weeks, with borrowing costs climbing close to those of Greece. On Monday they weakened following Barnier’s move, pushing the closely watched 10-year spread relative to German yields to 0.87 percentage points, close to a recent 12-year high.
The euro continued to weaken in response to the crisis, down 0.8 per cent against the dollar at $1.048 by early evening, while French stocks ended the day flat.
Le Pen slammed Barnier for not listening to her party’s demands to protect French citizens from measures on social security she said would erode their purchasing power.
“The French have had enough,” she said. “Maybe they thought with Michel Barnier things would get better, but they were even worse.”
Barnier had been locked in last-ditch negotiations on Monday over the fiscal package with Le Pen. The budget’s fate and that of Barnier’s administration remained largely in the hands of Le Pen’s RN since it is the biggest single party and a crucial swing voting bloc in the assembly.
But the talks proved fruitless, despite Barnier conceding on two out of three of RN’s demands.
“It’s basically game over for Barnier,” said Mujtaba Rahman of Eurasia Group. “France is about to enter its second serious crisis in five months.”
