Introduction

France is currently facing a significant political crisis as Prime Minister Michel Barnier’s government teeters on the brink of collapse. The situation has unfolded rapidly, with several key developments:

Government’s Controversial Move

On Monday, December 2, 2024, Prime Minister Barnier invoked Article 49.3 of the French Constitution to force through the 2025 social security budget without a parliamentary vote. This controversial move was made in an attempt to bypass opposition and implement the government’s austerity measures, which include €60 billion in savings through spending cuts and tax increases.

Opposition’s Response

In retaliation, opposition parties from both the left and far-right have announced their intention to file no-confidence motions against the government:

The far-right National Rally (RN), led by Marine Le Pen, has declared they will vote for a no-confidence motion.

The left-wing coalition, including France Unbowed, has also announced their support for a censure motion.

Potential Government Collapse

The no-confidence vote is expected to take place as early as Wednesday, December 4, 2024. If successful, it would mark the first time a French government has fallen due to a no-confidence vote since 1962. The motion requires 289 votes to pass, and with the combined support of the left-wing and far-right parties, it appears likely to succeed.

Economic Implications

The political turmoil has already had negative effects on the French economy:

Investors have punished French assets, with the CAC 40 stock index dropping nearly 10% since June.

There are concerns about France’s ability to meet its deficit reduction targets and comply with EU fiscal rules.

The public deficit is expected to exceed 6% of GDP in 2024, with the government’s goal of reducing it to 5% by 2025 now in jeopardy.

Next Steps

If the government falls, President Emmanuel Macron will need to appoint a new prime minister. However, given the divided nature of the National Assembly, forming a new government with majority support will be challenging. The political uncertainty is likely to persist, potentially leading to further economic instability in France and the broader eurozone.