Barnier’s budget woes imperil French government

Paris — The future for French Prime Minister Michel Barnier’s government looks bleak, with his struggles to push the 2025 budget through a polarised parliament likely to end in the toppling of his fragile coalition.

Barnier’s government could fall before Christmas, and perhaps even by next week, if far-right and leftist foes force a no-confidence motion that he is likely to lose, according to a dozen sources from across the political spectrum.

Even if Barnier survives, the sources said, he will only do so by caving in to demands to soften spending cuts, further weakening the country’s fragile public finances and denting investor appetite.

Much remains in flux, with Barnier’s team in nonstop negotiations with Marine Le Pen’s far-right National Rally (RN), which props up his administration, and other parties to avoid plunging France into its second political crisis in six months.

In a TV interview on Tuesday, Barnier described the current situation as “extremely concerning”, predicting “extremely serious and turbulent conditions on financial markets” should his government fall.

“The government will fall,” President Emmanuel Macron reportedly told allies, according to a Tuesday story in Le Parisien that the Élysée swiftly denied.

Investors reacted skittishly on Wednesday. The risk premium for French government debt rose to its highest level since the eurozone debt crisis of 2012, while bank shares dragged down the CAC 40.

The budget bill lies at the heart of France’s political malaise. It seeks to rein in France’s spiralling public deficit through €60bn in tax hikes and spending cuts. But it has proven to be kryptonite for Barnier’s right-wing government.

The bill was rejected by the deeply divided lower house — rendered nigh-on ungovernable by Macron’s ill-fated decision to call a snap election that delivered a hung parliament — and is being debated in the Senate.

With his options dwindling before a mid-December deadline, Barnier said on Tuesday it was “likely” he would invoke article 49.3 of the constitution, which allows the text to be adopted without a vote. Such a move would invariably trigger a no-confidence motion against the government.

For weeks, Marine Le Pen and her supporters have been ratcheting up the pressure on Barnier, saying they will vote to bring down the government if their demands to shield households, small-businesses and pensioners from the squeeze are not met.

Writing in Le Figaro newspaper on Tuesday, Le Pen appeared to lay the groundwork for toppling the government, denying public sector salaries would go unpaid and rejecting rivals’ depictions of her party as “artisans of chaos”.

Le Pen’s imperilled political fortunes may be influencing her decision-making, sources said.

Widely seen as the front-runner in the 2027 presidential election, she now faces the possibility of being barred from competing after prosecutors sought a mandatory five-year ban from public office for her alleged role in an embezzlement scheme. She denies the allegations, and declined to answer journalists’ questions as she entered court on Wednesday.

An aide to centrist legislator Gabriel Attal, Barnier’s predecessor as prime minister, said Le Pen’s threats to topple the government were a bid “to eclipse the trial saga”.

Senior RN legislator Jean-Philippe Tanguy denied Le Pen’s legal woes had influenced the party’s thinking. A senior RN party leader said there was still no definitive plan.

Still, a decision to topple the government, most likely in cahoots with the Left, is not without risk for Le Pen’s far-right party, which has moved from the fringes to the mainstream and is wary of being blamed for the resulting chaos.

“If we can avoid censure we will avoid it,” RN legislator Thomas Ménagé said. “But if by mid-December [Barnier] has not listened to the 11-million French people who voted for us … we will responsibly vote to topple this government.”

Barnier’s team has already signalled it is willing to water down the bill, with budget minister Laurent Saint-Martin acknowledging this week that the deficit might be slightly higher than the 5% of output originally foreseen.

Barnier’s best hopes of survival may come from splintering the leftist block the RN would need to bring down the government, targeting more moderate members of the Socialist Party (PS) such as former president François Hollande.

“PS legislators must see where they stand in relation to [the hard-left] France Unbowed party,” a Barnier aide said. “Everyone will do what they think is right.”

Hollande was circumspect about his plans, saying it was up to the prime minister to respond to the Socialist Party’s proposals.

Reuters