The government of France, headed by Prime Minister Michel Barnier, called with large difficulty in September of this year, is most likely facing disintegration. The Prime Minister, without a parliamentary majority, decided on 2 December to apply Article 49.3 of the French Constitution in order to push through the Finance Act without voting. Thus, the government sought to guarantee the adoption of the budget for 2025 and the social safety financing plan. Barnier pointed out the request to adopt these papers and assured that it remained open to dialog with representatives of all political groups while declaring itself willing to hear their arguments.
The Prime Minister besides tried to gain the support of the National Assembly (RN) headed by Marine Le Pen, but despite the gestures towards this party, the agreement was not reached. Le Pen set a number of boundaries, specified as maintaining pension indexation, better protecting sick and working people, but Barnier rejected her demands. In her reply, Le Pen accused the government that "the average French are charged with additional taxes of EUR 40 billion".
The usage of Article 49.3 provoked a wave of outrage, especially among the left-wing opposition. The alliance of leftist parties immediately filed a motion for a vote of distrust towards the government. Mathilde Panot, an highly left-wing MP for the La France Insoumise (LFI) party, described the Prime Minister's decision as "a takeover by an illegal government". On platform X, she wrote: “The fall of Barnier is simply a fact. Macron will be next." The LFI besides launched a petition on president Macron's impeachment, under which nearly 400,000 people signed in a short time.
The Marine Le Pen organization besides filed its motion for a vote of distrust, announcing that it would support the initiative of an alliance of leftist groups. In this way, an unprecedented majority was created in the parliament, the intent of which is to overthrow the current government. In its proposal, the RN pointed to the deficiency of expected structural savings in immigration policy and France's contribution to the European Union. The authorities were besides accused of failing to act to "restore purchasing power to the French", "defence of entrepreneurs and labour values", "fight against rent increases, speculation and fraud" and "mass de-burocratisation".
On Monday, motions for a vote of distrust were submitted to a 48-hour review process followed by a decisive vote. All political groups criticise the budget as "toxic" and "unfair". president Macron, who is accused of being ineffective in the management of the state and of not being able to fulfill the election promises, is besides blamed for this.
According to Bloomberg, budget uncertainty has already affected financial markets. Spread between 10-year French and German bonds increased by 8 basis points, reaching 89 points – the highest level since 2012. Prime Minister Barnier warned that his removal from power could trigger a "storm" in financial markets that would rise credit costs for France and another euro area countries. Finance Minister Antoine Armand warned that if the budget was rejected, taxes would should be increased for millions of households and safety and agriculture spending reduced.
Armand pointed out that an economy without a budget, in conditions of rising interest rates and uncertainty, is simply a situation where "no 1 wins – neither the French nor the company". Economists observe that the financial and economical consequences of the government's collapse may be hard to predict.
If Barnier's government falls, president Macron will gotta appoint a fresh Prime Minister to prepare and introduce a fresh budget. Although the constitution does not set a deadline for this decision, Macron will not be able to dissolve parliament and announce fresh elections before the summertime of next year, due to the existing regulations. The temporary government could usage exceptional rules to collect taxes and guarantee a minimum level of expenditure.
The first draft budget, presented by Barnier's government, provided for a taxation increase of EUR 60 billion in additional revenue, and expenditure cuts, including a simplification in drug refunds. This aimed to rapidly correct the budget deficit from the current level of 6.1% of GDP to 5% in 2025. However, in the face of political instability, the implementation of these assumptions is becoming increasingly unlikely.
France, the second largest euro area economy, plays a key function in the stableness of the region. The political and fiscal crisis in this country may besides increase lending costs in another associate States, threatening their economical situation. In 2012, the European Central Bank intervened to stabilise government bond markets, but presently there is no warrant of akin support. Experts inform that the current situation requires swift and decisive action to avoid escalation of the crisis, the effects of which may have a wide impact throughout the euro area.
Source: brusselssignal.eu, yahoo.com
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