Paris, France — French Prime Minister Michel Barnier warned tonight that France could face a fiscal catastrophe if lawmakers decide to bring down the government over a dispute concerning the national budget. In an interview with French television TF1, Barnier stated that the government’s potential collapse could trigger serious turbulence in the financial markets and cause significant economic repercussions for the country.
“There will likely be a storm and serious turbulence in the financial markets if the government falls. This is a very serious moment,” Barnier said, emphasizing that financial markets are already under significant pressure.
The budget proposed by Barnier’s government includes drastic spending cuts amounting to 40 billion euros, alongside a 20 billion euro tax increase. The primary goal is to reduce the growing budget deficit, which is projected to reach 6.1% of GDP by the end of the year — more than double the 3% limit required by European Union rules.
Political Instability in Parliament
Despite the seriousness of the situation, it appears that Parliament will not provide the necessary support for the budget. In that case, Barnier will be forced to use his constitutional right to pass the law without Parliament’s approval, but this could open the door for lawmakers to vote on no-confidence in the government.
The French left-wing has already announced its intention to seek a vote of no confidence, and Marine Le Pen, leader of the National Rally, has indicated that her party’s members will certainly support this initiative. Should the opposition succeed in garnering enough votes, Barnier’s government could fall, triggering a political crisis and potentially causing a Eurozone crisis. This situation recalls the Greek crisis, which destabilized the Eurozone in past years.
Interest Rates at Greek Levels
Barnier also pointed out that the interest rates France must accept in order to finance its national debt with investors from China and the US are now approaching Greek levels, signaling increased economic instability. This scenario heightens the risk for France’s economy and its ability to recover from a sluggish Eurozone economy.
Le Pen Demands Bureaucracy Cuts
Following a meeting with Barnier, Marine Le Pen emphasized that her party’s members of Parliament will vote for no-confidence if the prime minister does not back down on the proposed tax increase on electricity and does not delay pension adjustments for inflation. Le Pen also suggested that France find savings by reducing bureaucratic costs and cutting spending on medical aid for migrants.
France on the Brink of Fiscal Crisis
This political dispute is creating significant uncertainty for the French economy and presents a challenge for the EU in terms of the stability of the Eurozone. The potential collapse of the government could destabilize markets and worsen France’s fiscal situation. At a time when Europe is already grappling with a slowdown in the German economy and the threat of a trade war with the United States, the situation in France is becoming increasingly complicated and could have dangerous consequences for the continent as a whole.
