France’s PM charged with Mission: Impossible on budget bill — compromise

MARSEILLE, France (CN) — A French parliamentary committee met Thursday to hash out a final draft of the 2025 budget bill before sending it to a vote. The theoretical final step looks to be far from the last word on the subject, though, even if the seven deputies and seven senators come to an agreement.

Instead, experts argue the bill, which has become more a political than a fiscal issue, could send France’s fragile government toppling again. President Emmanuel Macron’s government had four prime ministers in 2024.

“It’s very possible that [French prime minister François Bayrou]’s government will fall in one or two months over the budget,” Léo Barincou, the chief economist of France at Oxford Economics, told Courthouse News. “Bayrou is trying to assemble a coalition going from the center left to the center right, and it’s going to prove extremely difficult because France doesn’t really have this culture of compromise.”

In the fall, Michel Barnier — Bayrou’s predecessor, whose three months in office set a national record for shortest term as prime minister — cozied up to the right. Barnier made numerous concessions to the National Rally, the far-right party headed by Marine Le Pen that holds the third-largest bloc in parliament.

But the adjustments didn’t cut it, and Le Pen ultimately led the charge to topple Barnier’s government with a motion of censure. The move was surprising, considering that the National Rally was in its most powerful bargaining position ever.

Bayrou is taking a different approach. After initially courting the Socialists, he has been toeing the line to rally some support from both sides.  

On Monday, Bayrou said people feel immigrants have “flooded” France, echoing right-wing sentiment to the delight of Interior Minister Bruno Retailleau, Justice Minister Gerald Darminin and right-wing parties. The comment provoked the Socialists to suspend their participation in budget talks until the prime minister rescinds his comment — so far, he has not.

“By trying to seduce the left, the right and the National Rally, it’s possible that he’ll lose on all counts,” Pierre Allorant, historian and political scientist at the University of Orléans, told Courthouse News. “I think there’s a great risk that the Socialist deputies will vote for censure, either on the state budget or on the social security budget.”

The longer the political flexing drags on, the more difficult it could be to practically implement measures like tax increases.

“France had to start the 2025 year without a budget — if he wants to raise taxes for 2025, it would have to be retroactive and it’s not fully clear that it’s constitutionally possible to do so,” Barincou said. “The government is still trying to figure out a way to raise taxes, including on corporates, which is supposed to bring in 8 billion euros of additional revenue.”

In 2024, France’s public deficit was roughly 6.1% of its GDP, well over the European Union’s fiscal rules dictating that members keep levels below 3%.

Bayrou made a series of concessions to the Socialists to win their support on the budget, which amounted to roughly 6 billion euros of additional spending compared to Barnier’s draft.

“So economically speaking, maybe in the short term, actually the fiscal impact will be a bit less negative because the deficit will be higher, so the austerity will be less painful,” Barincou explained. “But of course, in the longer run, France will have to make an adjustment sooner or later, and it will be more painful the longer it’s delayed.”

It’s relatively certain that the far-left will vote against the bill. The question is who will join them, and whether they will have enough votes to bring down Bayrou’s government.  

“It’s certain that the Greens have no choice, they’ll vote for censure, and the Communists don’t see any positive gestures in terms of social justice either,” Allorant said. “So the Socialists are afraid of finding themselves isolated.”

The government could find itself in a state of paralysis until June, when Macron is legally allowed to hold a new round of legislative elections — one year after abruptly dissolving the parliament and sending France into a political tailspin.

“We’re in a situation today of crisis and perhaps of wear and tear, of obsolescence of the Fifth Republic,” Allorant said. “If business leaders don’t invest, don’t recruit, because they’re afraid given that there’s no budget, if administrations and local authorities can’t equip themselves and invest either, well, the economy will decline and unemployment will increase very sharply — so it’s bad for everyone.”

Follow @lilyradz