France’s government is teetering on the brink of collapse, facing a no-confidence vote on Wednesday that is likely to succeed due to an unprecedented alliance between the far-right and left-wing factions of the National Assembly, Bloomberg reports.
Prime Minister Michel Barnier’s government triggered the crisis by using a constitutional maneuver on Monday to force through a controversial budget. This action prompted a coalition of leftist parties and Marine Le Pen’s National Rally to file no-confidence motions. Given the fragmented nature of the National Assembly and the reduced number of centrist lawmakers, this unlikely alliance is expected to command enough votes to oust the government.
A successful vote would mark an extraordinarily swift end to Barnier’s premiership, making it the shortest in France’s Fifth Republic, established in 1958. This rapid downfall highlights the significant political gains made by Le Pen since President Emmanuel Macron called a snap election in June.
The budget uncertainty has already sent shockwaves through financial markets. Concerns about the government’s stability led to a widening of the spread between French and German 10-year bond yields, reaching levels last seen in 2012 and briefly mirroring those of Greece. While the spread narrowed slightly on Tuesday, investor anxiety remains palpable.
A government collapse so close to the year-end budget deadline would create unprecedented challenges. While a caretaker government could use emergency measures to ensure basic tax collection and spending, the economic consequences remain uncertain. Finance Minister Antoine Armand warned that stopgap legislation would necessitate tax increases for millions and halt planned spending in key areas such as security and agriculture.
Should Barnier be dismissed, President Macron will be tasked with appointing a new prime minister to navigate the passage of a revised budget. However, this will be no easy feat, given the deeply divided parliament and the absence of any single party holding a majority. There is no constitutional deadline for this appointment, and legislative elections cannot be called until next summer.
While the left has called for Macron’s resignation, he remains immune to such calls. With the next presidential election scheduled for 2027, Le Pen is currently considered the frontrunner. France’s political turmoil, unfolding amid efforts to reduce its substantial deficit, has kept investors on edge for months. Barnier’s initial budget proposal included €60 billion ($63.2 billion) in tax increases and spending cuts aimed at lowering the deficit to 5% of GDP by 2025, from an estimated 6.1% this year.
