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.
-
Will Rachel Reeves hike taxes in Autumn Budget?Chancellor Rachel Reeves is set to unveil her second Autumn Budget on Wednesday, 26 November. Follow live updates and analysis ahead of the fiscal event
-
Steve Webb: The triple lock is there to do a job. I’m not embarrassed or ashamed of itThe triple lock means 13 million pensioners will now get an above-inflation state pension boost in April. While the rising cost of the policy has stirred controversy, Steve Webb, who served as pensions minister when it was introduced, argues the triple lock is vital and should stay. Webb speaks to Kalpana Fitzpatrick on the new episode of MoneyWeek Talks – out now.
-
Chen Zhi: the kingpin of a global conspiracyChen Zhi appeared to be a business prodigy investing in everything from real estate to airlines. Prosecutors allege he is the head of something more sinister
-
Canada will be a winner in this new era of deglobalisation and populismGreg Eckel, portfolio manager at Canadian General Investments, selects three Canadian stocks
-
Jim O’Neill on nearly 25 years of the BRICSJim O’Neill, who coined the acronym BRICS in 2001, tells MoneyWeek how the group is progressing
-
Build or innovate? How to solve the productivity puzzleOpinion There are two main schools of thought when it comes to solving the productivity puzzle, says David C. Stevenson
-
More clouds gather over renewable energy trusts – is there any hope for the sector?The outlook for renewable energy trusts has gone from bad to worse this year, with the industry being caught in a 'perfect storm'
-
Should ISA investors be forced to hold UK shares?The UK government would like ISA investors to hold more UK stocks – but many of us are already overexposed
-
Why Scotland's proposed government bonds are a terrible investmentOpinion Politicians in Scotland pushing for “kilts” think it will strengthen the case for independence and boost financial credibility. It's more likely to backfire
-
How Germany became the new sick man of EuropeFriedrich Merz, Germany's Keir Starmer, seems unable to tackle the deep-seated economic problems the country is facing. What happens next?
