Barring a last-minute U-turn by the far-right leader Marine Le Pen or other opposition, a no-confidence vote against Prime Minister Michel Barnier seems set to plunge France into the unknown as early as Wednesday. If it does pass, it will be the first time a government has been toppled in this way since Georges Pompidou’s in 1962. The EU’s second-largest economy will be left struggling to form a workable administration and pass an emergency budget by the year-end, the reputation of its political class further dented. It is hard to think of a worse moment: a month after the implosion of Olaf Scholz’s coalition in Germany, and weeks before Donald Trump’s return to the White House.
The potential chaos underlines the folly of the snap elections called by President Emmanuel Macron in July that produced a fractured and fractious parliament. His advisers continue to justify the decision by saying that, without it, France was heading for a showdown over a cost-cutting budget needed to reduce a ballooning deficit forecast at over 6 per cent this year. That showdown has come to pass nonetheless.
For now, despite Barnier’s warnings last week of a “big storm” in the markets, this is a political not a financial crisis. Though French borrowing costs have hit a 12-year high against Germany’s, there is little sign of Eurozone contagion. The risk to French bonds, however, will persist if the political instability becomes protracted.