France is grappling with a political crisis following the National Assembly’s no-confidence vote against Prime Minister Michel Barnier’s government. A majority of 331 lawmakers backed the motion, raising concerns over the country’s stability and the 2025 budget. Far-right and left-wing lawmakers united to punish Barnier for using special constitutional powers to push through a controversial budget without parliamentary approval.
The draft budget aimed to secure $63.07 billion in savings to address a growing deficit but faced heavy criticism. Barnier, anticipating the loss, was prepared to resign along with his cabinet. This defeat marks the first time since 1962 that a French government has lost a confidence vote, heightening political uncertainty following President Emmanuel Macron’s snap election in June.
The loss of trust in Barnier’s administration complicates the government’s ability to pass crucial legislation, including the 2025 budget. As the year ends, France risks lacking a stable government, threatening the budgetary process. Although the French constitution allows special measures to prevent a government shutdown, the political cost could be significant.
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This turmoil further destabilizes the European Union, already shaken by Germany’s coalition government collapse. Marine Le Pen, leader of the far-right National Rally, criticized Barnier’s austerity measures as dangerous and unfair, while the left-wing France Unbowed party called for Macron’s resignation. The crisis has unsettled financial markets, with France’s borrowing costs surpassing those of Greece.
Post-Macron’s early election, the CAC 40-the stock index that serves as the benchmark in France shows a downward trend of close to 10%, putting it at the bottom of the heap of every single significant EU economy. In addition, the euro itself has fewer than 4% in value lost. Some very important choices are to be made by Macron in order to truly access the impasse.