The financial and political instability in France led to the collapse of the government
On December 4th, the French Government collapsed for the first time since 1962. A government collapse doesn’t describe a government that’s fallen apart, but rather one in which the Prime Minister was removed from office through a vote of no-confidence. Michele Barnier, who was voted into office only this past September, became the shortest-serving prime minister in the history of France when his government collapsed this winter. Concerns about economic stagnation and political tension have been rising in France in recent years, and this government collapse is a result of these factors, not a reflection of Michele Barnier himself.
A growing budget deficit and national debt are a result of French President Emmanuel Macron’s attempts to reform current economic systems to make France more “business-friendly,” combined with global factors that have increased spending. To provide some context, Emmanuel Macron, who was elected into his presidency 7 years ago, has been working to make France more competitive. Namely, he’s lowered the wealth and corporate taxes to encourage the development of larger businesses in France and keep people of the higher class within the country. This has been effective and would probably be beneficial to France in the long term, but the issue arises when considering the other global factors affecting the economy. Still recovering from COVID-19 expenses and experiencing price increases in energy and gas as a result of the war in Ukraine, the French government has taken on a lot of the economic burden in trying to minimize the effect of these things on the public. They’ve increased public spending to accommodate citizens struggling due to the pandemic and have taken on the brunt of the price increases so that people aren’t as affected. The combination of lower taxes and increased public spending has caused a budget deficit of around 6% of the GDP and a debt that now tops 100% of the GDP (its highest ratio since WWII). This economic instability will only become increasingly problematic for France until something is done.
Taking action to resolve this wouldn’t be much of an issue if France weren’t also facing a political deadlock. This past June, Macron held a series of snap votes (a vote held earlier than initially scheduled) in an attempt to solidify his political backing. He hoped his party—the center Renaissance party—would have the majority. However, not only did they not win, but no majority emerged. This means that it has become near impossible to pass things through Parliament, so proposing a change in the budget would be extremely difficult. Despite the necessity of reform, no significant action was possible due to this political standstill. Furthermore, public resistance and disagreement to raised taxes and budget cuts added additional pressure to the government. Come September of 2024, France needed a new Prime Minister, but in this political deadlock it was difficult to find common ground. Michel Barnier, a center-right politician, was not the ideal choice for the left or the right parties who would have preferred to have someone of their own party in the position, but due to his experience and competency, President Macron managed to get enough support to appoint him for the role. In France, the Prime Minister takes care of domestic affairs, and Barnier was tasked specifically with creating a new budget plan to lessen the current deficit.
https://www.capitalgroup.com/pcs/insights/articles/french-economy-at-a-crossroads.html
Chart showing no dominant political party from the snap elections in June.
Barnier, when considering his budget plan, was facing economic, political, and social pressures. He needed to form a plan that would decrease the growing deficit, receive enough support from parliament to pass, and not cause too much upheaval among French citizens. He ended up forming a budget that would decrease the deficit by 60 billion euros through raised taxes and decreased public spending on things such as pensions. A movement like this is necessary to resolve the growing economic issues and create a more sustainable and balanced economy in France. Despite the need for budget reform, he couldn’t get enough support for these changes. Due to the lack of a dominant party and the unattractiveness of the plan to the public, Barnier was unable to get it passed through Parliament.
Barnier then attempted to use Article 49.3 of the French constitution, which would allow him to pass his budget plan without parliamentary approval. Doing this left him open to a vote of no-confidence, which is a vote held by parliament that, if passed, would force Barnier’s removal from office. The left and right parties, upset by the prospect of increasing taxes and decreasing public spending, decided to work together to gain the majority and vote Barnier out. To pass the vote of no-confidence, 288 votes were needed. The results came in on December 4th, and the left and right parties together were able to accumulate 331, marking the end of Barnier’s government.
Following the collapse of the government, a new Prime Minister was appointed and the ineffective budget from earlier in 2024 was put back into motion. With the instability the government is already facing in both political and economic matters, this government collapse will only cause more turmoil and uncertainty. Not only will the general struggle of managing the budget plan continue to prevail, but now that the left and right parties have found a means of overpowering the central party, there’s a potential threat of continued Government collapse. Now whenever motions for a budget plan or other significant decisions are made by a Prime Minister, the left and right parties have a means to oust them. Challenges will only continue to arise as France searches for a balance between a competitive but sustainable economy while working through this political deadlock. Because of the complexity of the situation and the difficulty of passing a budget plan (as seen through the situation with Barnier), it is unlikely that stability within the country’s finances or political state will improve much anytime soon.
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