French prime minister ousted in no-confidence vote

Paris: France’s far-right and left-wing MPs joined forces in a historic no-confidence vote prompted by budget disputes to force Prime Minister Michel Barnier and his cabinet members to resign, a first since 1962.

The National Assembly approved the motion by 331 votes on Thursday (AEDT). A minimum of 288 were needed.

The no-confidence vote against French Prime Minister Michel Barnier saw both sides of politics unite.Credit: AP

President Emmanuel Macron insisted he would serve the rest of his term which ends in 2027. However, he will need to appoint a new prime minister for the second time after July’s legislative elections led to a deeply divided parliament.

During a trip to Saudi Arabia earlier this week, Macron said discussions about him potentially resigning were “make-believe politics”, according to French media reports.

“I’m here because I’ve been elected twice by the French people,” Macron said. He was also reported as saying: “We must not scare people with such things. We have a strong economy.”

Macron will address the French on Thursday evening (Paris time), his office said, without providing details. Barnier is expected to formally resign by then.

A conservative appointed in September, Barnier becomes the shortest-serving prime minister in France’s modern Republic.

“I can tell you that it will remain an honour for me to have served France and the French with dignity,” Barnier said in his final speech before the vote.

“This no-confidence motion … will make everything more serious and more difficult. That’s what I’m sure of.”

Wednesday’s crucial vote rose from fierce opposition to Barnier’s proposed budget.

The National Assembly, France’s lower house of parliament, is deeply fractured, with no single party holding a majority. It comprises three major blocs: Macron’s centrist allies, the left-wing coalition New Popular Front, and the far-right National Rally. Both opposition blocs, typically at odds, united against Barnier, accusing him of imposing austerity measures and failing to address citizens’ needs.

French President Emmanuel Macron (right) with Prime Minister Michel Barnier last month. Credit: AP

Speaking on TF1 television after the vote, National Rally leader Marine Le Pen said “we had a choice to make, and our choice is to protect the French” from a toxic budget.

Le Pen also accused Macron of being “largely responsible for the current situation,” adding that “the pressure on the President of the Republic will get stronger and stronger”.

Macron must appoint a new prime minister, but the fragmented parliament remains unchanged. No new legislative elections can be held until at least July, creating a potential stalemate for policymakers.

While France is not at risk of a US-style government shutdown, political instability could spook financial markets.

France is under pressure from the European Union to reduce its colossal debt. The country’s deficit is estimated to reach 6 per cent of gross domestic product this year and analysts say it could rise to 7 per cent next year without drastic adjustments. The political instability could push up French interest rates, digging the debt even further.

Carsten Brzeski, global chief of macro at ING, said uncertainty over France’s future government and finances was deterring investment and growth. “The impact of France not having a government would clearly be negative for the growth of France and hence the Eurozone,” Brzeski said.

France has seen bond market borrowing costs rise, bringing back ugly memories of the Greek debt crisis and default in 2010-2012.

Analysts say France is far from a similar crisis because much of its outstanding debt does not come due for years, and because its bonds remain in demand due to a shortage of German government bonds. Additionally, the European Central Bank could intervene to lower French borrowing costs in case of extreme market turmoil, though the bar for that remains high.

AP

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