The centrist François Bayrou, 73, has been appointed prime minister of France after a historic vote of no-confidence put an end to the “shortlived” minority coalition of Michel Barnier, says The Guardian. Barnier’s government fell after he invoked special powers to push through his 2025 austerity budget without a vote in parliament. Taking office, Bayou, a political heavyweight who helped Emmanuel Macron win the presidential election in 2017 and who has run for president three times himself, acknowledged that he had a mountain to climb. He received a “baptism of fire”, with Moody’s downgrading France’s credit rating within hours of his appointment, says CNBC. Moody’s blamed political instability for the downgrade, saying it would make it hard for France to tackle its deficit. Investors’ unease has already pushed France’s ten-year borrowing costs above 3% this year.
Bayrou, founder and leader of the MoDem party, commands respect across the political spectrum, but the National Assembly remains “crippled by the same three-bloc impasse”, says Hugh Schofield on the BBC. The opposing three blocs of the 577-seat lower house are: Marine Le Pen’s far-right party, the National Rally, Macron’s pro-business allies, and the New Popular Front, a left-wing alliance that ranges from the Socialists to the far-left France Unbowed led by Jean-Luc Melenchon. Before Bayrou draws up a new budget, he will need to form a new government, the composition of which will depend on whether he manages to build bridges. Macron has been holding talks with parties from the centre-left and centre-right to broaden the outgoing minority conservative-centrist coalition, but so far all he has got from the Socialists, who hold 66 seats, is a “vague commitment” not to vote Bayrou out immediately, says The Economist.
Will François Bayrou's government mark a shift to the left?
Macron’s obdurate refusal to appoint a prime minister from the left, despite the New Popular Front winning the most seats in last summer’s snap elections, stems from fear of having his “legacy” unpicked, says John Keiger in The Telegraph. With “tiresome predictability”, France Unbowed has already said that it will table a motion of no confidence when Bayrou’s new government is appointed. Although Le Pen is unlikely to join him this time, Bayrou will be keen to reach a truce with the Socialists and Greens in order to “rob the two opposition blocs of the majority needed to win a no-confidence vote”. In terms of the budget, the “risk of things going wrong is high”. France is deeply wedded to its “social-security provisions and generous state allowances that have cushioned the population against economic reality and left the country with an onerous tax burden”. Many still resent Macron for raising the pension age from 62 to 64, even though it is “still among the lowest in Europe”.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Bayrou’s “bridge-building instincts” are a bonus, say Leila Abboud and Ian Johnston in the Financial Times. He already enjoys reasonable relations with both sides. However, he has also been described as “having a Pyrenean-sized ego” and, according to veteran French commentator Alain Duhamel, will “not hesitate to exert his power”. He will “not be easily disciplined”, says Duhamel, and will “tilt policy more towards the left”.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
MoneyWeek news quiz: Which G7 nation has the most generous state pension?The chancellor “set the context” for the Budget on 26 November this week, and November's Premium Bonds winners were confirmed. The state pension also made headlines. How closely have you been following the news?
-
Have a will? It may not be enough to secure your wishes – here’s what you need tooIncorporating a letter of wishes into your estate planning can provide a unique opportunity to personally guide your loved ones on your final wishes for them and you. We explain how a letter of wishes works.
-
The Stella Show is still on the road – can Stella Li keep it that way?Stella Li is the globe-trotting ambassador for Chinese electric-car company BYD, which has grown into a world leader. Can she keep the motor running?
-
LVMH is set to prosper as the wealthy start shopping againAfter two years of uncertainty, the outlook for LVMH is starting to improve. Is now a good time to add the luxury-goods purveyor to your portfolio?
-
Japan is still rising to new highs – here's how to investOpinion Political ructions in Japan are no obstacle to gains, and the return of inflation may even benefit stocks, says Max King. What is Japan doing right?
-
Investors need to get ready for an age of uncertainty and upheavalTectonic geopolitical and economic shifts are underway. Investors need to consider a range of tools when positioning portfolios to accommodate these changes
-
Investing in UK universities: how to spin research into profitsUK universities are a vital economic asset, but they are also Britain's 'equivalent of Gulf oil.' There are opportunities here for investors
-
Lessons from Nobel Prize winners in economics on how to nurture a culture of growthThe Nobel Prize in economics went to three thinkers who show us why economies grow and how we can help them do so. Governments would be wise to heed the lessons
-
'It’s time for Rachel Reeves to secure her legacy'Opinion Rachel Reeves has been a dreadful chancellor, and it's hard to see her remaining in office for another whole year. She could at least depart with some dignity
-
Yoshiaki Murakami: Japan’s original corporate raiderThe originator of Japanese activism, Yoshiaki Murakami, was disgraced by an insider-trading scandal in 2006. Now, he's back, shaking things up
