On December 2, French Prime Minister Barnier announced in the National Assembly that he chose to invoke Article 49-3 of the Constitution to bypass the National Assembly and force the passage of the budget bill, refusing to make further concessions on the draft budget for 2025. Article 49-3 of the French Constitution gives the government the power to force a bill through without a vote in the National Assembly. However, the National Assembly can also initiate a no-confidence vote against the government under Article 49-2 within 24 hours, with the vote required to take place within 48 hours. If the vote passes, the government will fall, and the bill will be rejected.
Barnier warned lawmakers that France has reached a 'critical moment' as far-right leader Le Pen is set to join forces with the left-wing coalition to potentially overthrow the French government as early as this week. A no-confidence vote against Barnier's government is reportedly possible on December 4, this Wednesday. Analysts believe that unless there is an unexpected development at the last moment, Barnier's government is likely to become the first French government since 1962 to be forced from power due to a no-confidence vote.
The 'National Rally' party led by Le Pen and a left-wing coalition proposed a motion of no confidence against the government on Monday. The number of parties supporting Barnier is insufficient to counter the collective action of both the left and right, meaning the French government could fall as early as Wednesday.
In the interim elections this June, the 'National Rally' became the largest single party in the lower house of parliament, making Le Pen the most influential power broker in Paris. Although Barnier nearly met all of Le Pen's demands and adjusted the French budget proposal for 2025, Le Pen stated that her party would still not support the bill, paving the way for the government's collapse.
Barnier told lawmakers on Monday: 'It is now up to you, as representatives of the nation, to decide whether to equip our country with responsible financial laws that are indispensable and useful. Or are we entering uncharted territory?' Barnier attempted to reassure Le Pen and, after compromising on her request not to raise electricity taxes last week, has dropped the proposal to reduce drug reimbursements.
Economists from Bloomberg Economics have stated that Le Pen may prefer political chaos over stability, thereby putting pressure on Macron to resign.
This timing is particularly dangerous for French finances, as the government must pass the budget by the end of the year or resort to untested emergency legislation to avoid a shutdown. However, Barnier has not given up on the government's plan to save substantial amounts by delaying pension adjustments linked to inflation. According to an official from the budget department, the 'National Rally' submitted an amendment to suppress this measure, but it was not adopted in time.
'Barnier does not want to respond to the demands of the 'National Rally's' 11 million voters,' Le Pen told reporters after the announcement. 'He said everyone should take responsibility, so we will take our responsibility.'
The uncertainty surrounding the budget prompted bond investors to sell off French government bonds, causing France's borrowing costs to temporarily reach levels as high as Greece's last week, and led Barnier to warn that if he were dismissed, there would be a 'storm' in the financial markets.
The spread between 10-year French and German government bonds widened by 7 basis points on Monday to 88 basis points, nearing the highest level since 2012. The French stock index CAC 40 closed roughly flat, with the euro down 0.8%.
For months, investors have been worried about France's political predicament, while the French government has been struggling to push through measures to reduce its bloated fiscal deficit.
The budget bill initially submitted by Barnier's government included tax increases and spending cuts amounting to €60 billion ($63 billion), aimed at significantly reducing the deficit from an expected 6.1% of economic output this year to 5% by 2025.
Budget Minister Laurent Saint-Martin told Le Parisien over the weekend that the request to amend the budget will cost nearly €10 billion. The 'National Rally' criticized most of these planned measures, arguing that they could harm family incomes.
'National Rally' leader Jordan Bardella wrote on X after the statement was released: 'A government that reconnects with the mainline of Macronism is out of options; it refuses to consider the social emergency at the end of the month and ignores the need to restart growth.'
If the government is ultimately rejected, ministers will remain in office to manage current affairs in a caretaker capacity, which may include emergency legislation to avoid a government shutdown. A new Prime Minister will then be appointed by Macron, although the constitution does not stipulate a deadline for him to make this decision.
While the left has called for Macron's resignation, he cannot be forced out. The next presidential election is scheduled for 2027, and according to polls, Le Pen remains the frontrunner. Macron can also dissolve the parliament again, but not until July next year, a year after the last election.
Barnier said, 'I sincerely believe that the French people will never forgive us for placing private interests above the future of the nation.'
Article forwarded from: Jin Shi Data