As France struggles with a growing political crisis and a huge fiscal deficit, parliamentarians will vote on a motion of no-confidence on Wednesday, which is likely to topple Prime Minister Michel Barnier’s administration.
The action follows Barnier’s effort on Monday to force through a portion of his government’s 2025 budget, which includes steps to close the significant deficit and put France’s public finances back into compliance with EU regulations by the end of the decade.
According to the government’s estimations, his finance measure comprises tax increases and expenditure cutbacks of €60 billion ($63 billion) with the goal of reducing the deficit to 5% the next year. Opposition parties strongly disagree with several of the policies, such as postponing matching pension increases to inflation.
Barnier, the head of a conservative and centrist-led minority administration who has only been in office since September, tried to adopt a portion of the budget via a contentious constitutional process that eschewed a legislative vote.
The left-leaning MPs, who have consistently pledged to overthrow his administration, took advantage of that tactic to introduce no-confidence resolutions against him.
On the margins of the NATO (North Atlantic Treaty Organization) meeting in Brussels on May 25, 2017, US President Donald Trump (L) talks with French President Emmanuel Macron at the US ambassador’s home before a working lunch. / Peter Dejong/AFP PHOTO/POOL (Photo courtesy of Peter De Jong/AFP via Getty Images should be used.)
After failing to get concessions from Barnier on the financial measure, the far-right National Rally is now expected to join the motion to overthrow the government.
In France, where no party has had a majority in parliament since snap elections in July, the no-confidence vote is only the most recent shock on a political rollercoaster.
The nation will descend into political anarchy if the legislation is approved. Barnier would become the shortest-serving prime minister in French history, and no administration has been overthrown in a no-confidence vote since 1962. Until French President Emmanuel Macron appoints new leaders, his government would have to act in a caretaker role.
In a fractured political environment, it is uncertain how any future prime minister would obtain unanimity of support and escape being overthrown in a similar manner. The far-right of Marine Le Pen’s party, the centrists of Macron’s party, and a left-wing alliance make up the three blocs that make up the parliament.
The government’s financial issues are now far more difficult to resolve as a result of this deadlock.
Concerns over how the political turbulence will affect France’s public finances momentarily raised the country’s borrowing prices above Greece’s on Monday.
According to the S&P Global Ratings credit rating agency, France’s government debt is close to 111% of GDP, which is unprecedented since World War II. This is partially because the government spent heavily to protect the economy from the pandemic and the energy crisis brought on by Russia’s full-scale invasion of Ukraine in February 2022.
By the end of the year, the credit rating agency projects that France’s budget deficit will have grown to 6.2% of GDP. That is one of the biggest budget deficits among euro-using nations and more than twice the 3% cap set by EU regulations.
S&P said on Friday that France’s economy is still open, prosperous, diverse, and balanced, with a sizable domestic private savings base. However, it also said that if the government was “unable to reduce its large budget deficits” or if economic growth consistently fell short of the agency’s predictions, the country’s credit rating may be reduced.
Tariq Kamal Chaudhry, an economist with Hamburg Commercial Bank, said on Wednesday that France’s leading service industry is already feeling the effects of the political unpredictability.
Speaking on the most recent poll of buying managers in the industry, which was released by S&P Global and Hamburg Commercial Bank, he said, “Demand fell sharply in November, sending a negative signal for early 2025.”
