Budget crisis in France/ French government at crossroads

2025-09-01 08:45:00, Kosova & Bota CNA

Prime Minister Bayrou has raised the issue of a vote of confidence. If the centrist politician fails on September 8, the government in France could still fall.

François Bayrou seemed calmer than expected last week, when he said in a subdued voice that he had asked the President to call an extraordinary session of Parliament on September 8, where a vote of confidence would be held before budget debates began.

With the surprise move, the prime minister hopes to win support for his planned austerity budget, which is facing widespread opposition in France. The minority government is planning savings of just over 44 billion euros to reduce the deficit to 4.6 percent of gross domestic product (GDP) next year - still far from EU criteria. Among the symbolic measures is the cancellation of two public holidays.

With this vote of confidence, Bayrou is taking a step that threatens more than just his career. If it fails, President Emmanuel Macron will be forced to replace the fourth prime minister and appoint a fifth head of government in about 600 days - after Élisabeth Borne, Gabriel Attal and Michel Barnier.

A level of change that is otherwise known in France only since the time of the Third Republic.

Policy comparable to 1932/33?

At the time, in the early 1930s, France was suffering from the effects of the Great Depression. Governments came and went, prime ministers fell every month. Between 1932 and 1933, the Third Republic went through six prime ministers. A record that speaks of its political paralysis.

The cause was almost always the same: disagreement over the budget. Tax increases, cuts, special taxes - all these plans failed. Thus, the budget became an obstacle that undermined faith in democracy and paralyzed the Third Republic.

Bayrou's dilemma

Ninety years later, some things look similar. France today is burdened by a mountain of debt exceeding 3 trillion euros, and the interest burden eats tens of billions from the budget every year.

Brussels is pushing for austerity measures, while financial markets are closely following Parisian policymakers. After Bayrou's announcement, the stock market reacted by falling prices and rising interest rates on government bonds, which this month even temporarily exceeded Greece's levels. Without a credible consolidation plan, Paris faces a downgrade from the rating agencies.

With its budget, the government is relying on a mix of subsidy cuts, curbed growth in social spending and moderate tax increases for high-income earners - a "soft austerity" approach that economists have been calling for years. But the problem lies not with the numbers, but with Parliament.

France's united opposition

Since the summer 2024 elections, the Government has lacked an absolute majority in Parliament, which is practically divided into three main blocs: the far-right Rassemblement National (RN), the center-right party supporting President Macron, and the left-wing alliance.

The RN is now openly calling for new elections. "We will vote against the vote of confidence. Only a dissolution will give the French people the opportunity to decide their future," declared Marine Le Pen on Platform X. She herself, following a court case, is unlikely to run again in new elections.

Instead of austerity measures, the RN is calling for investments in the police, the army and strengthening purchasing power. The party aims to finance this through new debt.

The left also criticizes Bayrou and his policies. The far-left La France Insoumise (LFI) is planning a general protest action, a kind of strike, for September 10.

The Greens, Communists and Socialists have also ruled out any support for Prime Minister Bayrou, who currently does not have a majority. Socialist leader Olivier Faure spoke of an "unfair budget" and promised an "alternative budget" in a television interview.

Austerity measures are also controversial in the conservative camp. Xavier Bertrand, President of the Hauts-de-France region, warned against disproportionately burdening the middle classes. A too-tough line, they say, will not solve the debt problems and will only strengthen the RN, which is leading in the polls.

Government warns against IMF intervention

The government itself is seeking a vote of confidence, while simultaneously warning of the consequences of failure. Finance Minister Éric Lombard declared on French radio on Tuesday that they do not want to pursue "a policy of fear," but the risk is real: In the worst case, even the International Monetary Fund could intervene.

"Our responsibility is to maintain the confidence of the markets. We are on the right track," Lombard assured. According to the minister, France is already at risk of paying higher borrowing costs than Italy.

He announced a "restructuring and justice budget" for 2026. Savings of 44 billion euros are planned.

The political fate of François Bayrou

Prime Minister Bayrou is in a dilemma. Without significant cuts, he will lose the confidence of the markets. With drastic cuts, he will not secure a parliamentary majority for the 2026 budget. The vote of confidence is therefore also a test of the stability of the entire system. If the Prime Minister fails on September 8, President Macron, who supports the austerity budget, will face difficult decisions. Will he call new parliamentary elections after just one year? Will he rely on a government of experts or a prime minister from another camp? Or, a year and a half before the presidential election, will he even question his mandate to pave the way for an early transfer of power?

For now, there are many questions, but the central question remains unanswered: How do you govern a country whose finances are spiraling out of control when no majority is willing to bear the burden?/ DW