French Premier Set to Survive No-Confidence Votes, Adopt Budget
(Bloomberg) -- French Prime Minister Francois Bayrou is set to ride out two no-confidence votes on Wednesday, giving him the stability needed to implement a delayed 2025 budget.
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He used a special constitutional provision on Monday to push the bill through parliament without a vote, triggering ballots that could force him to resign like his predecessor Michel Barnier in December. But the Socialists, one of the parties that voted to eject Barnier, have said they will abstain this time, likely dooming the motions to failure.
France is on its third government since President Emmanuel Macron called a snap election last summer that fractured the National Assembly into three roughly equal blocs. The political turmoil that's reigned since has spooked investors and undermined economic confidence.
Bayrou's likely reprieve has already boosted French bond markets. The spread between the yield on France's 10-year debt and Germany's, a widely watched measure of risk, fell to lows not seen since September, around 71 basis points.
Since taking office in December, Bayrou has focused on negotiating with the Socialists. Barnier, by contrast, had sought to deal with the far-right National Rally, headed by Marine Le Pen. But that approach ultimately backfired when she rebuffed concessions and voted against Barnier at the 11th hour.
This time, her party also appears likely to abstain. 'My conviction is that we need to avoid uncertainty,' its president, Jordan Bardella, said on Europe1 radio on Tuesday.
The new budget includes concessions to the Socialists that were agreed to on Friday by a cross-party group of lawmakers, such as preserving spending for health care and education. Bayrou also built support by pledging to reduce the deficit to 5.4% of economic output from 6% last year — a much less ambitious target than Barnier's 5% goal.
Still, after the budget is adopted, the prime minister will remain vulnerable as he lacks a majority to protect him from future no-confidence votes. The Socialists have already said they will file one after the budget is adopted over Bayrou's aggressive statements on migration reform.
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