French lawmakers are set to vote on Wednesday on no-confidence motions that are almost certain to remove Prime Minister Michel Barnier's fragile coalition, further escalating the political crisis in the eurozone's second-largest economy.
Unless there is an unexpected turn of events, Barnier's government will become the first French administration in over 60 years to be ousted by a no-confidence vote, amid the country's ongoing struggle to address a massive budget deficit.
The debate is scheduled to begin at 4 pm, with voting expected around three hours later, according to parliamentary officials. President Emmanuel Macron is set to return to France from a state visit to Saudi Arabia during the day.
If the government collapses, it would create a significant vacuum in Europe, with Germany also in election mode and just weeks before US President-elect Donald Trump re-enters the White House, Reuters reports.
In a primetime TV interview on Tuesday night, Barnier stated that he was open to budget discussions with Marine Le Pen's far-right National Rally (RN) and other parties, expressing hope that he could survive the no-confidence vote.
“It depends on the deputies who each have a share of responsibility before the French, before the voters, and before France too, which is in a rather serious moment,” he stated.
Barnier cautioned there was “a lot of tension ... a lot of feelings of injustice, a lot of feelings of anger," in the air. "We must be careful.”
However, Barnier rejected the suggestion from some members of his own centre-right party that Macron should resign to resolve the crisis, describing the president as “one of the guarantors of the stability of our country.”
Budget Minister Laurent Saint-Martin stated that toppling the government and its budget plans would lead to a larger deficit and greater instability.
After weeks of mounting tension, the political crisis escalated when Barnier announced he would push the social security portion of the budget through parliament without a vote, after failing to gain support from the RN.
Both Barnier's team and Le Pen's camp, which support the minority coalition, blamed each other for the standoff.
“Censuring the budget is for us the only way the constitution gives us to protect the French,” Le Pen told reporters.
The combined votes of the left and far-right are sufficient to remove Barnier, and Le Pen has confirmed that her party will support a no-confidence motion from a left-wing alliance. However, the RN's own no-confidence motion lacks the necessary support from lawmakers.
If the government collapses, Barnier will be compelled to resign and submit his resignation to President Emmanuel Macron, CNBC reports.
“Once Barnier resigns, Macron will likely ask him to continue as a caretaker. The alternative option of formally renominating Barnier looks unlikely given the manifest lack of a majority,” Carsten Nickel, deputy director of research at Teneo, commented.
Furthermore, amid the turmoil, French borrowing costs are rising, and the Euro has been weighed down by negative sentiment, worsened by disappointing manufacturing data from the euro area and ongoing political instability in Germany.
“France is facing a prospect of a growing fiscal deficit that will become more expensive to finance as their (government bond) yields rise amid this uncertainty,” said analysts at Maybank.