Macron seeks new French government amid political chaos

Emmanuel Macron met with key politicians in an effort to cobble together a new administration, a day after the French president vowed to serve out the remainder of his term. “The mandate you gave me democratically is for five years and I will exercise it fully,” Macron, whose term ends in 2027, said in a televised speech Thursday evening. He said he will appoint a new premier in the coming days who will be tasked with forming a government of general interest representing all the political forces committed to not censuring it. The speech came a day after Prime Minister Michel Barnier was evicted from office in a no-confidence vote backed by Marine Le Pen’s far-right party and the left over his plans for vast spending cuts and tax increases to repair gaping holes in public finances.

France has been in a political limbo since Macron called a snap parliamentary vote in June after getting trounced in European elections. That left the lower house split into three fiercely opposed blocs: a diminished center supporting the president, a leftist alliance and a strengthened National Rally, led by Marine Le Pen, which is now the biggest party in the National Assembly. What Bloomberg Economics Says...

“A sustained stalemate that leads to a spending freeze could bring as much or more fiscal consolidation as set out in Barnier’s budget.”

Macron was speaking on Friday with leaders of his party and its allies in parliament, as well as with center-right politicians and Socialist lawmakers to test support for a new government.

After meeting with Macron at the Elysee Palace, Socialist leader Olivier Faure said he was ready to support a new cabinet so long as it is not led by a conservative premier. He also said Macron agreed to call other parties from the leftist New Popular Front, including Jean-Luc Melenchon’s France Unbowed, to discuss a future government.

“We are ready to shoulder our responsibilities, but not at any price,” Faure said. “We will neither be led astray in a right-wing government, nor be responsible for the policies of the last seven years.”

Speaking at a press conference in Budapest on Friday, National Rally President Jordan Bardella said his party was ready to discuss possible prime ministers from the center or the right.

In his speech on Thursday, Macron said the goal of far-right and far-left lawmakers in voting for the no-confidence motion was to try to provoke an early presidential election. “They voted for disorder,” he said. “They voted not to create but to break down.” Macron said the new government’s priority will be approving a budget, with a special law submitted to parliament before mid-December to keep the state running in the interim. But any new premier will face the same political gridlock that that brought down Barnier.

Outgoing ministers have warned that the stopgap emergency legislation could have unintended consequences, including pushing up income tax for millions of households. Le Pen, meanwhile, has said the stopgap legislation would be preferable to Barnier’s initial plans. Macron said a full budget would be needed as soon as possible to avoid French people “paying the bill” of the eviction of the government. He did not give any indication of whether the new government should attempt a sharp fiscal adjustment to bring the deficit down to 5% of economic output next year from 6.1% in 2024.

The budget that Barnier proposed, which was the trigger that brought down the government, sought a fiscal adjustment of €60 billion ($63.2 billion) through savings and tax hikes. The uncertainty in Paris over the future of Barnier’s government and budget fueled investor concerns about France’s already stretched public finances in recent weeks. Under selling pressure, the state’s borrowing costs compared to peers rose at one point to highs not seen since the euro zone’s debt crisis more than a decade ago.