President Emmanuel Macron serves not only as France’s head of state but also appears to aspire to be the spokesperson for the entirety of Europe. He has endeavored to lead Europe’s response to the Russia-Ukraine conflict, opposed the United States by endorsing Palestinian statehood, and offered his perspective on former President Donald Trump’s stated interest in acquiring Greenland. Nonetheless, critics assert that his focus should remain on domestic concerns.
Within Macron’s France, considerable parliamentary unrest exists regarding how to resolve the substantial national debt. Furthermore, Prime Minister François Bayrou is scheduled to face a vote of no confidence as early as Monday, a vote he is widely expected to lose. Bayrou was appointed by Macron in December of last year, succeeding three other prime ministers who resigned during 2024. In many respects, the forthcoming events represent a familiar scenario where the president appoints yet another prime minister, mirroring his action last December when Michel Barnier stepped down.
Late last month, Bayrou emphasized France’s significant indebtedness despite its status as the second-largest economy in the , trailing only Germany. Beyond its substantial economic size, France also stands as a crucial trading partner for the United States.
In light of the impending fiscal crisis, Bayrou formulated a strategy to reduce the fiscal deficit to 4.6% of GDP next year by implementing savings of 44 billion euros ($51 billion) and abolishing two public holidays. This proposed deficit would be smaller than any recorded between 2020 and 2024.
However, the budget-cutting proposal has not been well-received by other parties within the French Parliament, and Bayrou confronts a vote of no confidence there. Organized labor unions are incensed by the prime minister’s plans and are threatening work-stoppage strikes. Leo Barincou, a senior economist at Oxford Economics in Paris, informed Digital that any union strikes are unlikely to be protracted or significantly disruptive to the economy, unlike the Yellow Vest protests during the winter of 2018-2019.
Should Bayrou be defeated, several alternatives exist. “Macron could call a snap election or designate a new prime minister, though this would prove challenging given the current circumstances,” states Elias Haddad, senior markets strategist at Brown Brothers Harriman . He added, “Bayrou is expected to lose, and all other parties have pledged to destabilize the government.”
One outcome that is almost certainly not expected is a resignation . “Most likely, Macron will appoint another prime minister and establish a minimal budget that will not cause undue alarm,” Barincou suggests. In essence, some budgetary reductions may occur, but they will be far less substantial than those proposed by the incumbent prime minister in August.
While a snap election appears highly improbable, the populist National Rally (RN) announced it is preparing for such an event and is reviewing a potential list of candidates. The RN’s president, Jordan Bardella, stated last week, “We can and must be ready for anything, including a return to the ballot box with a dissolution of the National Assembly,” as reported by Reuters.
Bardella’s remarks preceded a meeting focused on preparing the RN for parliamentary elections, and he indicated that the party had already selected 85% of its candidates, Reuters reported.
A potential collapse of the French Parliament has reportedly caused concern at the European Central Bank, which oversees monetary policy for the eurozone, the single currency area. Already, yields on French government bonds have risen by one-tenth of a percentage point, thereby increasing borrowing costs beyond those in neighboring Germany.
However, Haddad indicates that while it is not expected to dissipate soon, it is unlikely to burden the broader eurozone. He further notes that despite a recent decrease in demand for French bonds, there is minimal cause for alarm. “Underlying demand remains robust and is unlikely to lead to a destabilizing situation in the financial markets,” he affirms. “The bonds are relatively healthy.”
Ben Habib, who is currently preparing to register Advance U.K., a new right-leaning political party in Britain, posits that part of the overarching problem facing France stems from a cultural deterioration in the West. He asserts, “The dependency culture has become ingrained in Europe, including the U.K.” In other words, too many individuals rely on government assistance rather than generating income through their own endeavors.
Consequently, this has led to slower economic growth and substantial increases in . This trend includes the U.K., France, Italy, and other nations. Habib remarks, “It is remarkable to me that we have not yet encountered severe economic difficulties.”
This report includes contributions from Reuters.