Thread by @Valen10Francois

French PM Michel Barnier has fallen last night after a mere 3 months in office over the budget

The stakes are huge.

Who will replace Barnier? Will Macron resign? Can France avoid a US-style shutdown?

A 🧵on what happened and what happens next

What happened? At a very basic level Barnier and his minority government tried to push through the budget (without a majority) and got deposed.

The Left and the Le Pen's nationalists voted to take his government down, 331 of the 577 MPs, making Barnier the shortest-serving PM.

This is super rare, the Parliament had only deposed the PM once in the 5th Republic.

When? In 1962! Georges Pompidou was the PM then. Here's a picture of him with... a young Michel Barnier behind him.

Barnier knew the odds were stacked against him.

Leading a minority government in a fragmented Assembly is tough even for the most seasoned of negotiators.

He had to pick up the pieces after Macron's disastrous decision to call for elections that exploded parliament in 3 parts

But if Barnier didn't have a majority in the first place how did he get to form a government in the first place?

The very uncomfortable truth is that he was surviving thanks to the tactical neutrality of Le Pen who abstained on previous votes

Tactical neutrality because she was using her leverage at every turn to push her agenda.

Whenever a minister spoke poorly of Le Pen, Barnier would give them a proper dressing down.

So why did it explode now?

2 main reasons: the budget and the change of strategy of Le Pen

1) The budget

In a parliament split in 3 equal and uncompromising thirds you don't expect much legislation.

But you do need to vote the budget. It also happens to be one of the most difficult budget in recent history.

France's deficit is getting out of hand at 6.1% of gdp in 2024, considerably worse than expected. EU treaties say you must be under 3%

A bad look especially when other EU countries have been recovering since Covid

But as one former Eurocrat said "France is France"

The government does need to find 60bn euros in savings or increased revenue. That obviously means bad news.

The government had pledged 40 bn in savings (but has stayed very very light on details) and 20 bn in taxes (via a "one off" tax on the wealthy and a temporary raise of the corporate tax).

Over the last 2 months, many parliamentarians have been busy doing the opposite. The left used the chaos to reduce the pension age back to 62.

The stakes are huge. France's credibility is at stake

French borrowing costs have reached Greek levels.

Rating agencies are tracking France closely.

And if deficit is not reined in than the Eruopean Commission could put financial sanctions on France.

To be sure France is not going to bankrupt, but the cost of servicing the debt is going to keep increasing.

It will also severely reduce France's capacity to deal with future crises.

Without a majority how could Barnier get that budget through? The French constitution has many remarkable tools to force through legislation.

Article 49.3 allows you to pass legislation without a vote...

But it does trigger a confidence vote.

Barnier went for it and lost.

Second factor? Le Pen's change of strategy

She started adding more redlines for her maintained neutrality. As if she wanted the government to fall.

Barnier refused to index pensions on inflation fully so he gave her the casus belli she wanted

Explained in more details below

For Le Pen over the last few years pensioners have been the real barrier on her way to the presidency. She considerably underperforms there. Fighting on the hill for pensions might be a good look for her.

But this might the real game changer to explain her change of strategy

Accused of illegal party funding using EU parliament funds for her staff, she could be deemed ineligible for the next three years, which would rule her out for the 2027 presidential election.

So what next? On the political side we are stuck. Macron dissolved last June, we can't have another election before this summer. We still have the 3 blocks in parliament

So Macron is going to have to make do with roughly the same people.

Unless the left breaks up and you get the socialists and greens come along but why would they join a sinking ship for 6 months?

The far-left France Insoumise and the center will never agree to work together

So you can expect the next 6 months to be high in drama but low in legislation.

But as the crisis intensifies, fingers will increasingly point towards the man who created this whole mess.

Last June after a disastrous European election, he decided to dissolve parliament. He lost nearly half of his parliamentary support.

Why did he go for it? Nobody knows.

My best guess: I think he believed he would profit from the left's divisions. They had spent the last 5 months accusing each other of being Zionists and anti-Semites.

But to everyone's surprise they got together and built a common front for the elections

Macron's decision took everyone by suprise.

Especially his own MPs and his then PM Gabriel Attal.

Needless to say they weren't happy with that ballsy call

If the gridlock continues I suspect you won't only get pressure from the left and right on Macron to resign, but internally too with many of Macron's exgenerals with presidential ambitions of their own

Macron is under no obligation to resign but his lame duckisation is advanced

(Macron's resignation now would also not change the situation in parliament, you would still have to wait next June).

What about the budget are we heading towards a shutdown?

A shutdown is possible but given available constitutional tools very unlikely.

Here's a very detailed summary below

TLDR: We most likely won't get a new budget before NYE but you have emergency bills that can prolong the 2024 bill in2025. This obviously has big consequences with very different winners/losers, but it does stop a shutdown

Short of everyone losing it we won't have a shutdown

There is an irony in all of this. Barnier fell because he refused to give in to Le Pen's blackmail on indexing pensions on inflation fully

yet one of the reasons France has such a huge budget issue: we spend 14.4% of gdp on pensions vs the 11.9% EU average

I wrote about the issue of pensions in further detail. it's nuts that we are spending this much when pensioners have a lower poverty and better living standards.

It's a ticking time bomb that will force many future governments to collapse

https://x.com/Valen10Francois/status/1831263397771440308

Wasn't super clear. Le Pen knows that a dissolution makes an early presidential more likely. It's still not my basecase but she definitely has potentially a lot to gain to rattle the system a little.

https://x.com/Valen10Francois/status/1864594009039224857

If you liked this thread I'd be very grateful if you could share the first post above!

I regularly write about French politics which might get very bumpy over the next few months so stay tuned!

https://x.com/Valen10Francois/status/1864592551648579893