Macron's government in crisis as no-confidence vote forces search for new premier

French President Emmanuel Macron is in search of a new prime minister following a no-confidence vote against his government on Thursday, as the far-right and left united to oppose a controversial budget proposal.

The French president needs to find a premier who can pass a 2025 budget through a deeply divided parliament. But any new leader will face the same financial squeeze that brought down Prime Minister Michel Barnier’s administration.

The French president is due to make a statement at 8 p.m. on Thursday.

The budget bill that sank Barnier’s government contained €60 billion ($63 billion) in tax increases and spending cuts that aimed for a reduction in the deficit to 5% of economic output in 2025, from an estimated 6.1% this year.

“This budget was toxic for the French,” far-right leader Marine Le Pen said in an interview on French television after she voted to bring down the administration. Instead, she said, the country needs “a budget that’s acceptable to all.”

The chaos in the European Union’s second-biggest economy has prompted bond investors to punish France’s sovereign debt relative to its peers and Barnier had warned of a “storm” in financial markets if he was ousted.

France’s 10-year bond gained on Thursday, driving the yield over equivalent German securities to 80 basis points, the narrowest since Nov 25. The spread — a key gauge of political risk — rose to 90 basis points last week, the highest since 2012.

Barnier, a seasoned conservative and previously the EU’s chief Brexit negotiator, was only appointed in September, making his tenure the shortest for any premier since France’s Fifth Republic was founded in 1958. He is also the first French prime minister to lose a no-confidence vote in more than 60 years.

Macron has the authority to appoint a new prime minister, but he had a lengthy struggle before he managed to win limited support for Barnier from a fragmented parliament. Le Pen said that she is willing to work with another government, so long as they work with her party to draw up the budget.

Still, initial indications suggest that Macron’s allies are seeking to persuade the Socialists to break away from their left-wing allies to rebuild the so-called Republican Front of mainstream parties.

Finance Minister Antoine Armand warned Tuesday that stopgap legislation would raise taxes for millions of households and block planned spending increases for some priorities, including security and farming.

Le Pen has been ramping up the pressure on Macron to resign as a way to break the impasse and allow France to move forward.

“It’s up to his conscience to decide whether he can sacrifice public action and the fate of France to his own pride,” she said during the debate on Wednesday night.

Macron has said he won’t step down until his term ends in 2027 and he can’t be forced out of his job. Le Pen is the frontrunner for the next presidential election, according to opinion polls.

News.Az