French lawmakers are all but certain to oust the government with a no-confidence motion on Wednesday, plunging the euro zone’s second-largest economic power deeper into political crisis.
Barring a last-minute surprise, Prime Minister Michel Barnier’s government will be the first in France to be ousted by a no-confidence vote in more than 60 years, as the country struggles to overcome a huge budget deficit. Struggling for
That would pierce the heart of the European Union at a time when Germany is also weakened and in election mode, just weeks before US President-elect Donald Trump re-enters the White House.
In a TV interview on Tuesday, Barnier said he still believed his government could survive the vote, scheduled for the evening after a debate starting at 4pm (1500 GMT).
But Jordan Bardella, head of the far-right National Rally (RN), confirmed on Wednesday that his party would join forces with left-wing parties to vote to oust Barnier.
He said Barnier’s optimism showed the government was “totally out of touch with what is happening in the country”.
He told France Inter Radio that this government is dangerous for my country. We will vote the motion of no confidence.
Barnier’s interior minister, Bruno Retellio, was disappointed.
“Nothing is over till the vote but we can see that we are moving towards condemnation (of the government),” he said. Sea News.
President Emmanuel Macron, who seeks a second term in 2022, sparked the crisis by calling for snap parliamentary elections in June.
His term as president runs until mid-2027 and he cannot be forced out by parliament, but the RN and the hard left are already saying he should resign as he faces the 2018-2019 Yellow Vest. We are facing the biggest crisis since popular unrest.
Since Macron announced the election, France’s CAC 40. FCHI has fallen nearly 10% and is the biggest loser among the EU’s top economies. The single currency is down about 4 percent.
A vote of no confidence jeopardizes efforts to reduce the budget deficit.
Political uncertainty is already affecting France’s services sector, a monthly survey shows.
“Positive signs […] What was seen in the summer, partly because of the Olympics, is now a thing of the past,” said Tariq Kamal Chaudhry, economist at Hamburg Commercial Bank, after looking at the HCOB Purchasing Managers’ Index for France’s service sector. .
Barnier’s draft budget sought to reduce the fiscal deficit, which is expected to exceed 6 percent of national output this year, to 60 billion euros ($63 billion) with tax increases and spending cuts. It sought to bring the deficit down to 5 percent the following year.
The caretaker government could propose emergency legislation to roll over the spending cap and tax provisions starting this year. But that would mean Barnier’s austerity measures are falling by the wayside.
Barnier says the consequences of voting for him would be devastating for state finances, but RN lawmaker Laure Lavalette said. TF1 TV: “There is no cause for greater confusion. Don’t play with fear […] It’s not all that broken.”
Economists and experts say bond investors will protect France from the dire financial “storm” Barnier has warned of, but the political crisis will hurt businesses, consumers and taxpayers.
“This is a slowdown crisis that will lead to continued widening of spreads and continued deterioration of sovereign creditworthiness,” said Christian Koff, head of fixed income and FX at Union Investments, which is underweight French debt.
“But right now, I don’t see the ingredients for this to get completely out of hand and turn into a full-blown debt crisis.”
If the no-confidence vote passes, Macron could ask Barnier to remain in a watchdog role as the search for a new prime minister could take until next year.