Prime Minister Michel Barnier Warned of “Moment of Truth” as Le Pen’s Party Poised to Bring Down His Government
French Prime Minister Michel Barnier has warned that France has reached its “moment of truth” as far-right leader Marine Le Pen’s party is set to join a left-wing coalition to topple his government. Le Pen’s National Rally, along with a leftist alliance, filed motions on Monday to hold no-confidence votes against the government, which could bring about a government collapse as early as Wednesday.
The National Rally, which became the largest single party in the lower house of parliament in a June snap election, has paved the way for Le Pen to become Paris’s most influential power broker. Despite Barnier’s efforts to appease Le Pen, including abandoning a proposal to reduce drug reimbursements, she has announced that her party will not back the budget bill.
The heightened uncertainty has sent bond investors fleeing, with the spread between 10-year French and German notes widening by seven basis points on Monday to 88 basis points, near the highest level since 2012. The CAC 40 Index ended largely flat, while the euro fell 0.8%. French Finance Minister Antoine Armand warned of “painful consequences” if the government falls, including a rise in income tax for 380,000 more households, and higher bills for 18 million people.
The uncertainty has also raised fears of a “storm” in financial markets if Barnier is dismissed from power. The government has been trying to push measures to reduce its unwieldy deficit, which is expected to reach 6.1% of economic output this year. Barnier has made some concessions to Le Pen, but has refused to give in on some of her demands, including a proposal to delay the indexation of pensions to inflation, which the National Rally has slammed as potentially harming household incomes.
The fallout could be far-reaching, with emergency aid for farmers, school maintenance, and hiring more police officers all at risk of being scrapped. President Emmanuel Macron has refused to resign, but if the government falls, he would appoint a new prime minister, although there is no constitutional deadline for his decision.