France’s parliament voted on Monday to bring down the government over its plans to tackle the ballooning national debt, deepening a political crisis and forcing President Emmanuel Macron to find his fifth prime minister in less than two years.
François Bayrou, 74, who had been in office for only nine months, will now tender his resignation. This leaves Macron with a narrowing set of options, while financial markets signal growing concern over France’s political and fiscal crisis.
Bayrou had unexpectedly called for a no-confidence vote to win parliamentary support for his strategy to lower the country’s deficit, which is nearly double the European Union’s 3% ceiling. His plan aimed to secure 44 billion euros ($51.51 billion) in savings for the next year’s budget and start tackling a debt pile equivalent to 114% of GDP.
However, opposition parties were unwilling to back his austerity measures, especially with the 2027 election for Macron’s successor on the horizon.
Macron’s options are now limited. He could nominate a politician from his own centrist minority bloc or a conservative, but that would be a continuation of a strategy that has so far failed to create a stable alliance. He could also pivot to the left by nominating a moderate socialist or choosing a technocrat.
Regardless of the choice, it is unlikely that the new government will hold a parliamentary majority. Finance Minister Eric Lombard stated before the vote that the need for a new government would inevitably lead to a dilution of the deficit reduction plan.
Macron may eventually decide that the only way out of the crisis is to call a snap election, but he has so far resisted calls from the far-right National Rally and the hard-left France Unbowed to dissolve parliament for a second time.
The Fiscal Mess
The next government’s most pressing task will be to pass a budget—the same challenge Bayrou faced.
“You have the power to bring down the government, but you do not have the power to erase reality,” Bayrou told lawmakers before the vote. “Reality will remain relentless: expenses will continue to rise, and the burden of debt, already unbearable, will grow heavier and more costly,” he warned, adding that France’s “very survival is at stake.”
France’s EU peers are watching closely. The country holds the highest deficit as a percentage of GDP in the euro zone. It pays more to service its debt than Spain, and spreads against benchmark German 10-year bonds are at their highest level in four months.
A credit rating downgrade from agencies like Fitch, Moody’s, or S&P Global, which are set to review their ratings in the coming months, would hamper France’s ability to raise money at low interest rates, potentially worsening its debt problems.
This period of political and fiscal uncertainty risks undermining Macron’s influence in Europe at a time when the United States is taking a tough stance on trade and security, and war is ongoing in Ukraine.
Sources familiar with Macron’s thinking say he and other political figures believe a snap election would not solve the crisis and that talks with the Socialists should be pursued. The Socialists have offered a counter-budget that would impose a tax of at least 2% on personal wealth over 100 million euros, a proposal that would be difficult to reconcile with Macron’s pro-business reform agenda.
Discontent is also brewing on the streets. A grassroots protest movement called “Bloquons Tout” (“Let’s Block Everything”) is calling for nationwide disruption on Wednesday, and trade unions are planning walkouts for the following week.
“France is done,” said Mohamed, 80, a retired hospital worker.
