French govt faces collapse after opposition says it will back no-confidence vote

PARIS: The French government is all but certain to collapse later this week after far-right and left-wing parties said they will vote in favour of a no-confidence motion against Prime Minister Michel Barnier.

Investors immediately punished French stocks and bonds as the latest developments plunged the euro zone’s second-biggest economy deeper into political crisis.

“The French have had enough,” National Rally (RN) leader Marine Le Pen told reporters in parliament, saying her party would put forward its own no-confidence motion and will also vote for any similar bill by other parties. The left will also propose a similar motion.

“Maybe (voters) thought with Michel Barnier things would get better, but it got even worse.”

Barring a last-minute surprise, Barnier’s fragile coalition will be the first French government to be forced out by a no-confidence vote since 1962.

A government collapse would leave a hole at the heart of Europe, with Germany also in election mode, weeks ahead of Donald Trump re-entering the White House.

RN lawmakers and the left combined would have enough votes to topple Barnier. They now have 24 hours to put forward their no-confidence motions.

Their comments came after Barnier said on Monday that he would try to ram a social security bill through parliament without a vote after a last-minute concession proved insufficient to win RN’s support for the bill.

French stocks reversed course, while a sell-off in the euro gathered pace and bonds came under pressure, pushing up yields.

The CAC 40 was last down 0.6%, having risen by as much as 0.6% after Barnier’s concessions. The euro fell 1% and was heading for its largest one-day drop since early November. The yield on French government 10-year debt was up 2.7 basis points to 2.923%, having traded at a session low of 2.861% earlier.

‘Chaos’

Mathilde Panot of the left-wing France Unbowed, said: “Faced with this umpteenth denial of democracy, we will censure the government … We are living in political chaos because of Michel Barnier’s government and Emmanuel Macron’s presidency.”

Barnier urged lawmakers not to back the no-confidence vote.

“We are at a moment of truth … The French will not forgive us for putting the interests of individuals before the future of the country,” he said as he put his government’s fate in the hands of the divided parliament which was the result of an inconclusive snap election Macron called in June.

Since it was formed in September, Barnier’s minority government has relied on RN support for its survival. The budget bill, which seeks to rein in France’s spiraling public deficit through 60 billion euros ($63 billion) in tax hikes and spending cuts, snapped that tenuous link.

Barnier’s entourage and Le Pen’s camp each blamed the other and said they had done all they could to reach a deal and had been open to dialogue.

A source close to Barnier said the prime minister had made major concessions to Le Pen and that voting to bring down the government would mean losing those gains.

“Is she ready to sacrifice all the wins she got?” the source close to Barnier told Reuters.