France’s newly formed government held its inaugural meeting Friday, facing the daunting task of resolving the budget crisis that led to the downfall of the previous administration, Bloomberg reports.
The political shakeup comes amidst growing concerns about France’s financial stability. Government spokeswoman Sophie Primas emphasized the need for cross-party cooperation.
Prime Minister Francois Bayrou, appointed by President Emmanuel Macron to replace the ousted Michel Barnier, presented his new cabinet last week. He is expected to unveil his policy agenda to parliament on January 14 and has set a mid-February deadline for a new 2025 budget proposal. Barnier’s downfall came in early December after opposition from the left and far-right joined forces to block his fiscal plans, arguing they imposed too much hardship on French households.
President Macron’s choice of Bayrou, a veteran centrist known for his ability to build consensus, is seen as an attempt to bridge the political divide. Bayrou has assembled a cabinet of experienced figures, including two former prime ministers, and appointed Eric Lombard, an investment professional with ties to the left, as Finance Minister. Lombard, together with Budget Minister Amelie de Montchalin, is engaging in consultations with all political parties and parliamentary groups through mid-January to gather proposals for potential budget amendments.
Lombard revealed in an interview published Sunday that his goal is to reduce the deficit to around 5% this year, down from over 6% in 2024, while safeguarding economic growth.
Challenges Ahead
However, analysts are skeptical about Bayrou’s chances of success. The financial and political constraints that proved fatal to Barnier remain, and until new legislative elections can take place – which cannot occur before July at the earliest – Bayrou faces the challenge of navigating a fractured parliament where Macron’s party lacks a majority. A decree has been issued to extend last year’s spending limits until a new budget is approved, and ministers have been ordered to limit spending to essential items, according to Agence France-Presse.
France has been in a state of political instability since June, when Macron dissolved the National Assembly and called early elections. The results produced a divided lower house, with the leftist New Popular Front alliance, Marine Le Pen’s far-right National Rally, and a smaller group of centrists supporting the president forming three distinct blocs.
The country’s financial woes have also impacted international markets, resulting in a sell-off of French debt and an increase in borrowing costs compared to its European counterparts. Last month, Moody’s Ratings downgraded France’s credit rating, citing concerns about weakened public finances and skepticism about the new government’s ability to sustainably reduce deficits beyond 2025.
