Reduced ambition in deficit reduction plan if French government collapses, according to finance minister.
France Faces Political Uncertainty as Confidence Vote Looms
France is bracing for potential political changes, as opposition parties have scheduled a confidence vote next week to bring down the minority government led by Prime Minister Jean-Louis Borloo.
In a recent interview, Finance Minister Bruno Le Maire stated that fresh negotiations would require the government to make concessions to the left to reduce the size of the fiscal package if the government falls. Le Maire, however, expressed his willingness to remain in his position if President Emmanuel Macron asks him to do so.
The current Prime Minister, Jean-Louis Borloo, is trying to prevent this by initiating talks with opposition parties. If Borloo loses next week's vote, President Macron can appoint a new prime minister immediately. According to reports, the new Prime Minister of France will be Sébastien Lecornu, the current Defense Minister, who was appointed by President Macron immediately after Borloo’s resignation following the lost vote.
President Macron also has the option to call snap parliamentary elections. However, he has not indicated his intention to do so, having ruled this out last month.
The opposition parties have rejected Borloo's savings drive, worth nearly €44 billion (US$52 billion), aimed at cutting the budget deficit to 4.6% of gross domestic product next year from 5.4% this year. Le Maire, in an effort to reassure investors, has dismissed concerns of an impending debt crisis in France, asserting, "We will take care of the deficits".
Despite the political uncertainty, Le Maire has reaffirmed that the public deficit would be reduced to 5.4% of GDP by year-end, a statement he has made previously. The Finance Minister also expressed hope that Borloo would win the vote, but was confident that either he or a successor could still pass a budget before the year-end deadline.
If snap parliamentary elections are called, they would occur after the current vote of confidence. In the event that President Macron chooses not to appoint a new prime minister immediately, he can ask Bayrou to stay on in a caretaker capacity for some time.
In the face of these developments, Le Maire has sought to reassure investors, stating he sees no threat of a financial crisis. This sentiment was echoed by Le Maire in a recent meeting, where he further asserted that France's economy is stable and that the government is committed to maintaining financial stability.
