France’s Barnier government has stepped down, what will happen next? | Wilnesh News

The collapse of French Prime Minister Michel Barnier’s government on Wednesday can be seen as the culmination of months of political turmoil in France, with left-wing and far-right opposition parties unlikely to form an alliance to overthrow the government in a vote of no confidence.

However, analysts and economists said that the end of Barnier’s short-lived premiership and government did not mark the end of Paris’ problems, but ushered in a new period of political turmoil and uncertainty in Paris.

Barnier resigned on Thursday morning, hours after last night’s vote in which 331 MPs from the left-wing New Popular Front (NFP) coalition and the far-right National Rally (RN) backed a motion of no confidence in his government.

The vote, which came after weeks of debate over plans for a 2025 budget of tax hikes and public spending cuts, was not a close call, with far more deputies backing the motion than needed to pass it in parliament and the National Assembly. of 288 representatives. This is the first time since 1962 that a French government has been deposed.

Barnier’s ouster is the culmination of a political crisis that began earlier this year with President Emmanuel Macron’s decision to call early parliamentary elections, a move that was ironically aimed at solidifying his centrist coalition in the country. The basis of power of the National Assembly.

Ultimately, the move backfired, and Macron got what he didn’t want from the June and July elections: his own center’s power base was significantly weakened, and the National Assembly was divided between the powerful left and right. For two.

President Macron is now under pressure to find a successor as prime minister quickly, Reuters reports On Thursday, he hoped to have someone in place as soon as possible on Saturday, when U.S. President-elect Donald Trump and other dignitaries gather in Paris for the reopening of Notre Dame Cathedral.

The next candidate may face the same problem as Barnier, with the left and right expected to harass the new government with their own 2025 budget agenda, just as they did with Barnier.

“France is… entering a new era of political instability,” Charlotte de Montpellier, senior economist for France and Switzerland at ING, said in a note late Wednesday.

“President Macron will have to appoint a new prime minister, he will have to form a new government. The National Assembly is highly polarized and divided into three main camps – left, center right and far right – and the search for a new prime minister will not Confronting a motion of no confidence directly would be a very difficult task,” she said.

“France could therefore be without a government for weeks or even months,” she added.

There has been speculation that Macron could nominate his ally, Defense Minister Sébastien Lecornu, or veteran centrist leader François Bayrou, president of the Movement for Democratic Party in France. assume this position. Other possible candidates mentioned include Interior Minister Bruno Reitello and former Prime Minister Bernard Cazeneuve.

Mujtaba Rahman, managing director of Europe at Eurasia Group, said whoever inherits the role will likely not last long and will not be expected to do so.

“His (no ‘she’ in the frame) first order of business will be to push for a rollover of the 2024 budget. His second order of business will be to try to revive Barnier’s 2025 deficit-reduction budget through amendments that The case may appeal — arguably an impossible task — to the left or the far right, or both,” Rahman said in a report late Wednesday.

Analysts have speculated that Macron will choose Barnier’s successor within days, but noted that the candidate’s premiership may actually be a stopgap until new parliamentary elections next July, which is 12 months away. One year after the last vote.

“France’s deepest and most complex political crisis in sixty years will continue to erupt next year,” Lachman said. He warned that “the confrontation between three mutually hateful forces in the National Assembly will continue for months and there will be no early stage.” hope of resolution.

The Eurasia Group’s new base case is that new parliamentary elections will be inevitable next year, with a 75% chance.

As things stand, analysts believe that France’s main political groups are likely to agree on an interim budget that will simply extend the 2024 budget into next year. This will prevent France from “closing down” during the New Year period if it cannot meet its financial obligations.

Delaying the budget may avert a looming crisis, but it also postpones the urgent need to solve France’s fiscal problems, with the budget deficit expected to reach 6.1% of GDP in 2024 and expected to rise further if measures are not taken to rein in spending.

Investors appear to have accepted the collapse of the French government as a “fait accompli”. France’s benchmark 10-year government bond yield remained relatively steady at around 2.9% on Thursday, a far cry from a week ago when France’s borrowing costs reached the same level as heavily indebted Greece. CAC 40 It will be in positive territory at noon Thursday.