European institutions in Brussels are paying attention not only to the financial discussions but also to the political challenges that are unfolding in France.
The European Union has its eyes on the French National Assembly as Prime Minister Michel Barnier’s government may be nearing its end.
The issue at hand is the budget, which was urgently prepared after Barnier took office in September to lead a minority coalition.
Barnier, the leader of the Christian Democrat party (Les Républicains), has proposed a plan to reduce France’s public deficit, currently estimated at 6.1% for this year, to 5% by 2025.
Andreas Eisl, a researcher at the Notre Europe think-tank, says that while France is not facing a real budgetary crisis in terms of debt sustainability, the situation could become problematic if the political crisis continues.
“The risk exists if the political crisis continues for several years and we fail to correct the budgetary path, which I believe is not sustainable in the long term. Gradually, we could find ourselves in a situation that may become problematic,” he told Euronews.
Barnier is facing pressure on two fronts. Domestically, both the far right and the left have proposed a vote of no-confidence against his government. He is also tasked with ensuring France complies with the European Stability and Growth Pact. As the second-largest economy in the EU, France represents 16.6% of the bloc’s GDP.
In response, the prime minister has proposed a €60 billion plan, comprising €40 billion in spending cuts and €20 billion in additional revenue.
However, it is not the economic uncertainties that are troubling the markets at the moment, but the ongoing political deadlock.
Florence Autret, who runs the Chutes blog, pointed out that if Barnier’s government collapses, it is unclear whether President Emmanuel Macron will keep him in office, appoint a new prime minister, or even resign himself.
“There are still quite a few people in France calling for him to resign,” she told Euronews.
“If the president resigns, that would trigger presidential elections, followed by legislative elections in the summer. This would lead to months of political speculation and campaigning, during which France would be largely absent from the decision-making process.”
The political instability in France will weigh heavily on European debates. Paris’ influence risks being weakened at a time when the EU’s new institutional teams aim to make rapid progress on the geopolitical, industrial, and climate challenges facing the 27 Member States.
