French government in turmoil as barnier resigns after vote
French Prime Minister Michel Barnier will submit his resignation to President Emmanuel Macron on Thursday at 4:00 AM Eastern Time. This follows the passing of a vote of no confidence in Barnier's cabinet, which has been in office since September 21. The government will retain limited powers to manage current affairs. The budget proposal he submitted for 2025 will be "frozen," as well as other projects submitted to Parliament.
Barnier's government is the shortest-serving cabinet in the history of the Fifth Republic, dating back to 1958. The vote of no confidence means that the government resigns and will handle current affairs until a new cabinet is appointed.
Right after the parliamentary vote, the far-left party France Unbowed (LFI) called for "early presidential elections." Far-right leader Marine Le Pen—whose position decided the government's fate—did not join these calls. She stated that "pressure" on President Emmanuel Macron "will increase" if there is no "respect for voters."
- We will allow the next government to work - added Le Pen, demanding a joint creation of a 2025 budget that would be "acceptable to everyone." The fall of Barnier's government means that his prepared budget proposal will likely not be passed by the end of the year.
President Emmanuel Macron will address the citizens in a television speech on Thursday evening. According to the newspaper "Le Figaro," Macron met with his associates on Wednesday evening, right after returning from a visit to Saudi Arabia.
The dismissed government manages current affairs until a new cabinet is appointed. These actions ensure the continuity of the state and respond to urgent matters. However, a government handling current affairs cannot take steps of a political nature, which—as the law states—would create new rights and obligations for citizens. It deals with implementing existing laws and cannot exceed their provisions in its actions.
It is unrealistic for Barnier's successor to prepare a new budget proposal so that both Houses of Parliament review it before December 31. However, a financial paralysis, like the American "shutdown," is not possible.
The French constitution provides a solution where the government—whether new or dismissed—"asks Parliament for authorization to collect taxes and opens, by decree, credits that were the subject of a parliamentary resolution adopted last year." In practice, this means the possibility of applying budgetary provisions from the previous year in the new year.
High deficit. Macron: We are a wealthy country
However, this is a temporary and inadequate solution when France is struggling with a high deficit. It automatically increases certain budget expenditures (e.g., public administration salaries). This "automatic" budget also practically implies higher taxes for millions of taxpayers, as the income tax scale will not be revised to account for inflation.
Political uncertainty discourages investors and financial markets. Recently, the interest rates on French bonds have risen, indicating lower economic credibility. Barnier's budget was to be a step towards repairing public finances and providing €60 billion in savings. With the government's fall, France may have difficulty convincing markets that any new proposal will appear quickly.
In recent days, President Emmanuel Macron has been dispelling fears of a financial crisis and assuring that France "has a strong economy." - We are a wealthy, strong country that has carried out many reforms and adheres to them, with stable institutions - said Macron.
