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France's government looks all but certain to collapse later this week after far-right and left-wing parties tabled no-confidence motions against Prime Minister Michel Barnier on Monday.
Investors immediately punished French assets as the latest developments plunged the eurozone's second-largest economy deeper into political crisis, with serious doubts whether the annual budget will be approved.
“The French have had enough,” Marine Le Pen of the far-right National Union (RN) told reporters in parliament, saying Barnier, who only became prime minister in early September, had made matters worse and should be ousted.
“We are proposing a vote of no confidence against the government,” she said.
Barring a last-minute surprise, Barnier's fragile coalition would be the first French government to be forced out by a no-confidence vote since 1962. this way.
The RN supports both bills of no confidence
MPs from the RN and the left together have enough votes to oust Barnier, and Le Pen has confirmed that her party will vote on the left-wing coalition's no-confidence bill in addition to the RN's own bill. That vote is likely to take place on Wednesday.
The parties announced their no-confidence motions after Barnier said earlier on Monday he would try to push a social security bill through parliament without a vote as a last-minute concession proved insufficient to win RN support for legislation.
“Faced with this further denial of democracy, we will condemn the government,” said Mathilde Panot of the left-wing France Unyielding. “We live in political chaos because of the government of Michel Barnier and the presidency of Emmanuel Macron.
The spread between French bonds and the German benchmark widened further and the euro sell-off gathered pace.
Since Macron called early June electionsthe French CAC 40 stock index fell by nearly 10 percent. It closed unchanged on Monday after falling more than one percent earlier in the day.
“We are in a moment of truth”
Barnier urged MPs not to support the vote of no confidence.
WATCH | Unsettled political climate after French elections:
A left-wing coalition won the most seats in France's parliamentary elections, but failed to achieve a minority. The country now has no dominant political bloc, creating uncertainty about what the next government will look like.
“We are in a moment of truth … The French will not forgive us for putting the interests of individuals ahead of the future of the country,” he said as he put the fate of his government in the hands of the divided parliament that resulted from inconclusive early elections Macron called in June.
Barnier's minority government relied on the support of the RN for its survival. The budget bill, which aims to rein in France's growing public deficit through 60 billion euros (about C$88.5 billion) in tax increases and spending cuts, severed that tenuous link.
Barnier's entourage and Le Pen's camp blamed each other and said they had done everything possible to reach a deal and were open to dialogue.
A source close to Barnier said the prime minister had made major concessions to Le Pen and that a vote to topple the government would mean losing those gains.
“Is she ready to sacrifice all her victories?” the source told Reuters.
There are no early elections before July
If the no-confidence vote does go ahead, Barnier would have to resign, but Macron could ask him and his government to remain in a caretaker role to handle the day-to-day work while he searches for a new prime minister, which it may not happen until next year.
One option would be for Macron to appoint a government of technocrats with no political agenda, hoping that could help survive a no-confidence vote. In any case, there cannot be new early parliamentary elections before July.
As for the budget, if parliament does not pass it by December 20, the caretaker government can invoke constitutional powers to pass it by ordinance.
However, this would be risky as there is a legal gray area as to whether a caretaker government can use such powers. And this will certainly cause dissatisfaction on the part of the opposition.
The more likely move would be for the caretaker government to propose special emergency legislation to carry over the spending limits and tax provisions from this year. But that would mean Barnier's planned austerity measures would fall away.
