Far-right leader Marine Le Pen has teamed up with the left-wing alliance to overthrow the French government, plunging France into prolonged turmoil, which could further disrupt investor sentiment.
Due to controversies over next year's budget, the majority of members of the National Assembly support a vote of no confidence against Barnier's government, which has been in power for only three months. This is the shortest term for a prime minister since the establishment of the Fifth Republic in France in 1958.
The roots of the current turmoil can be traced back to June, when French President Macron called for an emergency vote to rebound from the defeat in the European elections. As a result, Macron allowed Le Pen's 'National Rally' to become the largest party in parliament, and its leader became the most influential power broker in the country, while his centrist coalition crumbled.
'For those who think I am deliberately choosing a disastrous policy through a vote of no confidence, I want to tell them that the disastrous policy is not condemning such a budget proposal,' she told legislators on Wednesday. 'This is the end of this fleeting government.'
As people generally anticipated the voting results, the euro against the dollar fluctuated little around 1.0514 after the announcement, and French government bond futures also retraced some earlier gains. Barnier had warned that if he stepped down, there would be a 'storm' in the financial markets.
Macron will address the nation from Paris at 8 PM local time on Thursday (3 AM Beijing time on Friday).
After the vote, Le Pen stated that she was willing to cooperate with another government as long as they worked with her party to formulate the budget. In an interview with French television, she said, 'This budget is toxic for the French people.' She said the country needs a 'budget that everyone can accept.'
Barnier will submit his resignation to French President Macron on the 5th local time. Barnier becomes the first French prime minister in over 60 years to lose in a vote of no confidence. The only prime minister dismissed during the Fifth Republic was Georges Pompidou in 1962, who ultimately received reappointment with the support of strong President de Gaulle.
There is no sign that the current deadlock will end easily. Macron has the authority to appoint a new prime minister, but he struggled for a long time to win limited support for Barnier from a fragmented parliament.
After the voting in June, the lower house split into three fiercely opposing groups: the pro-presidential centrists, the left-wing alliance, and the far-right led by Le Pen. Since new parliamentary elections won't be held until July next year at the earliest, this composition will not change.
The economic issues facing France have exacerbated the divisions between these groups, with this year's budget deficit expected to exceed 6% of GDP, and voters are reluctant to accept spending cuts or tax increases.
When Macron appoints a new prime minister, they will immediately need to pass the 2025 budget, which will face the same fiscal tightening as Barnier's government. Le Pen stated that if the government collapses, she will vote for a 'special law' to pass the 2025 budget.
The budget bill submitted by the Barnier government includes €60 billion ($63 billion) in tax increases and spending cuts, aimed at reducing the deficit from an expected 6.1% of economic output this year to 5% by 2025. Barnier has called on opposition party members not to force him to step down, saying, 'This will not disappear due to the magic of a no-confidence motion. This no-confidence motion will make everything more severe and difficult.'
Le Pen has been pressuring Macron to resign to break the deadlock and move France forward. She said in the debate, 'Whether he can sacrifice public action and France's fate for his pride depends on his conscience.'
Macron has stated that he will not step down before the end of his term in 2027, and his work cannot be forced. Polls show that Le Pen is the frontrunner for the next presidential election.
What will happen next?
The outgoing cabinet remains in office but has limited power and is likely to rely on untested emergency legislation to tax and formulate important spending policies.
Macron is fully responsible for appointing a new prime minister, but the constitution does not specify a deadline for making the decision, nor does it name a clear candidate—previously, Macron took nearly two months to select Barnier.
Once a new prime minister is appointed, they will propose cabinet nominees appointed by the president, and then a new budget bill for 2025 must be submitted to parliament.
No new legislative elections can be held before July next year.
Potential prime minister candidates include:
1. Bernard Cazeneuve: 61 years old, former Prime Minister of France, and Interior Minister during Socialist President François Hollande's term.
2. Sébastien Lecornu: 38 years old, the youngest defense minister since the French Revolution, is a seasoned politician and a staunch supporter of Macron.
3. François Bayrou: 73 years old, an experienced centrist politician, currently the chairman of the MoDem party, and a key ally of Macron in parliament.
4. Jean Castex: 59 years old, former Prime Minister of Macron's government, known for his southern French accent and management skills. He is currently the head of the state-owned company RATP, which operates the Paris metro.
5. Michel Barnier: 73 years old, Macron may reappoint this outgoing prime minister. However, Barnier seemed to rule out his own possibility on Tuesday night.
Article forwarded from: Jinshi Data