FRANCE has enjoyed about nine months of relative political stability under centrist Prime Minister Francois Bayrou. However, the eurozone’s second-largest economy faces an imminent bout of instability on Monday (Sep 8) – which could shake global market confidence – when Bayrou’s government is expected to lose a confidence vote.
The vote seems likely to end, either with fresh legislative elections, or French President Emmanuel Macron naming a fifth prime minister in some 20 months.
Historically, this degree of political turmoil recalls the era of the Third Republic (1870 to 1940), which was defined by a polarised electorate and high instability.
French fiscal challenges are growing
Monday’s high-stakes vote in G7 France hinges on a key question vexing Bayrou and Macron: how to run a country with finances deep in the red when there is no clear legislative majority for fiscal responsibility. The vote was called by Bayrou ahead of a likely no-confidence measure that the opposition was preparing for later this year.
The prime minister is trying to reduce debt that is now well over 110 per cent of gross domestic product, and a deficit that in 2024 was nearly double the European Union’s 3 per cent limit. His new Budget plan includes a 44-billion-euro (S$66-billion) spending squeeze, including the axing of two public holidays.
The proposals have been condemned by the political left and right, with neither side apparently backing down ahead of Monday’s vote.
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This has generated market angst, with the gap narrowing between French and Italian 10-year bond yields.
There is even discussion of France facing a Greek-style crisis, conjuring the spectre of the so-called Troika – the European Commission, the European Central Bank and the International Monetary Fund – which helped deliver austerity measures during the eurozone crisis after 2010.
Legislative numbers not in Bayrou’s favour
While Finance Minister Eric Lombard asserts the government is still hoping to reach a last-minute deal with the opposition, the parliamentary arithmetic makes this unlikely.
Pro-government groups have 210 votes between them, while the opposition parties of left and right have 353.
To survive, Bayrou needs the support of the Socialists (66 seats) or the right-wing, populist National Rally (123). However, both parties have publicly ruled this out so far.
Barring a significant political surprise, it appears most likely, therefore, that Bayrou will share the fate of recent premiers Michel Barnier (the shortest-serving in France’s Fifth Republic), Gabriel Attal, and Elisabeth Borne. Bayrou’s fall would mean a fifth French prime minister in around 600 days.
Macron also under mounting pressure
If Bayrou falls, it will also be Macron on the political ropes, with growing questions about whether he will see out his final term to 2027.
The president was first elected in 2017 as a youthful, optimistic insurgent who up-ended the long-standing French political duopoly of Socialists and right-of-centre Republicans.
Yet, the high hopes surrounding his presidency have been repeatedly shattered. Moreover, he is the principal architect of this latest crisis.
The immediate origins of Monday’s political drama, potentially only the second time a French government has lost a confidence vote in over six decades, stem from Macron’s huge, failed gamble in June 2024. Then, he dissolved parliament much earlier than needed, betting that voters would back his centrist coalition – a massive miscalculation.
Ironically, he may have made his disastrous decision partly from a belief that if the National Rally (formerly called the National Front) won big, the reality of governing in a difficult fiscal context would undercut its popularity. This, he may have calculated, would decrease the odds of the party’s first presidential victory in 2027 – a potentially massive blow to his legacy.
Crisis is primarily political
However, the June 2024 vote brought an outcome few, if any, polls predicted. The lower chamber fragmented three ways between the leftist New Popular Front coalition (including the Socialists), Macron’s centrists, and the National Rally. After months of stand-off, Macron handed Barnier in September 2024 what may have been a “mission impossible” – to find a path through the wreckage.
This underlines that the crisis that France faces is primarily, political. To be sure, France’s economic outlook is ugly too, but the challenge of governing in a deadlocked legislature is top of mind.
The trigger for Barnier’s removal in December 2024 was a slate of budget proposals to reduce France’s huge fiscal deficit, which grew under Macron’s presidency despite first-term reforms. Barnier’s attempts to address this were met with a pattern that continues today – huge political opposition from the left and right.
Troublingly, the political problems in Paris have no immediate, obvious resolution.
So, as the 27-member EU prepares for what may be one of its most testing periods, including the possibility of an endgame in the Ukraine war, France’s leadership will be punching below its weight.
The political problems in Paris stem, in large part, from Macron’s increasingly lame-duck status. While he asserts he will fulfil the remainder of his term until 2027, there remains an outside possibility that he will quit early, like Charles de Gaulle did in 1969, amid growing unpopularity.
However, the most likely scenario remains Macron limping along till 2027, possibly in a period of so-called “co-habitation” with a government not of his own political colours.
Implications go beyond domestic policy
While the looming crisis might seem confined to the shores of France, it could have significant economic and political implications abroad.
There are already signs of growing jitters in financial markets. In Asia, for instance, Japanese yields on long-dated bonds hit a record high on Wednesday, reflecting broader anxiety over global growth and government debt that could flare up further amid new bout of eurozone instability.
Take the example of Ukraine, where Macron has, with UK Prime Minister Keir Starmer, helped form a so-called coalition of the willing to assist Kiev in the event of any ceasefire and ultimate peace deal.
So far, Macron has been able to drive international policy from the pulpit of the presidency.
However, should there be fresh elections and a more concerted, hostile parliamentary majority, this could change with much of the French left and right much more cautious about assisting Kyiv.
Taken together, Paris is therefore facing what could yet be a first-order political crisis that may usher in not only fresh parliamentary elections, but a presidential one too. The timing could hardly be worse for France, or Europe, as they confront growing geopolitical and economic headwinds.
The writer is an associate at LSE IDEAS in the London School of Economics
