Bayrou Voted Out Deepening France’s Political and Fiscal Mess

The Wall Street Journal reports French Government Collapses in No-Confidence Vote

President Emmanuel Macron has lost his second government in less than a year, a measure of how France is caught in a spiral of political dysfunction that is draining its public finances.

A no-confidence motion against the government of Prime Minister François Bayrou won the support of 364 lawmakers in the 577-seat National Assembly, forcing him to tender his resignation.

“You have the power to overthrow the government, but you don’t have the power to erase reality,” Bayrou told lawmakers at the National Assembly, moments before the vote, describing France’s finances as “a silent, underground, invisible, and unbearable hemorrhage.”

Macron’s office said he would accept Bayrou’s resignation on Tuesday and appoint a new prime minister tasked with forming a government in the coming days.

The next prime minister will have to cajole lawmakers in the National Assembly, the highly fragmented lower house of Parliament, to agree on next year’s budget by the end of December. France is also facing a gauntlet of public protests against any cuts to public spending, starting with a Wednesday demonstration organized by the “Let’s Block Everything” movement.

The gridlock is fueling public frustration and providing France’s antiestablishment parties with fodder to argue the time has come for voters to turn the page on decades of governance by mainstream leaders.

“We are witnessing the collapse of a system,” far-right leader Marine Le Pen said on Monday, calling for new parliamentary elections.

Lawmakers on the far left are demanding that Macron himself step down—something he has repeatedly said he won’t do before his term ends in 2027. And Macron doesn’t plan to call snap parliamentary elections, a maneuver that cost his party dozens of seats in 2024 and led to the lower house’s current fragmentation.

Far-left lawmaker Mathilde Panot called on protesters to take to the streets and pressure Macron to leave office ahead of schedule.

“The president does not wish to change policy, so we will change presidents,” she said.

For Macron, picking a new prime minister will be a challenge of its own. Bayrou is the fourth prime minister to lose his job over the past year-and-a-half. Socialist lawmaker Boris Vallaud said on Monday his party was ready to take the helm of a new government.

Let’s Block Everything Movement

There is no need for a “Let’s block everything movement” because there is nothing in sight that would allow anyone or any party to govern.

There is tri-polarization of the Left, the Center, and the Right. None of them can or will deal with budget realities.

What’s it All About?

The crisis revolves around Eurozone fiscal rules. The EU never enforced its Growth and Stability Pact or Maastricht Treaty rules. But now it wants to.

France is one of the worst offenders.

Compliance Rules

1. Deficit rule: a country is compliant if (i) the budget balance of general government is equal or larger than -3% of GDP or, (ii) in case the -3% of GDP threshold is breached, the deviation remains small (max 0.5% of GDP) and limited to one year.
2. Debt rule: a country is compliant if the general government debt-to-GDP ratio is below 60% of GDP or if the excess above 60% of GDP has been declining by 1/20 on average over the past three years.

France’s general government gross debt is projected to reach approximately 116.0% of its GDP in 2025.

France Budget Deficit and Debt-to-GDP 2024

(Click on image to enlarge)

Debt-to-GDP courtesy of Trading Economics, Deficit insert

Financial Crisis in Europe With France at the Epicenter

Please recall my March 27, 2024 post Expect a Financial Crisis in Europe With France at the Epicenter

What’s the Basic Problem?

Eurointelligence says “Technology is the main cause of the decline. Geopolitics is what accelerated it.”

Technology is not the problem. The Maastricht treaty that created the Eurozone is flawed. And it cannot be fixed without unanimous agreement

The EU Is Dysfunctional

In a single word, the EU is dysfunctional. That’s the problem, not technology. The Maastricht treaty itself is a big part of the reason the EU is dysfunctional. The Euro itself, with one common interest rate, is fundamentally flawed.

France and Italy Noncompliance

• France Debt-to-GDP: 113% vs target 60%
• France Budget Deficit: 5.8% vs target 3%
• Italy Debt-to-GDP: 135.3% vs target 60%
• Italy Budget Deficit: 3.4% vs target 3%

France is Ungovernable

There is no chance of any political party addressing the debt and deficit rules.

So, why would anyone want to govern?

The only answer is arrogance, but arrogance will not fix any problems.

Related Posts

March 27, 2024: Expect a Financial Crisis in Europe With France at the Epicenter

What’s the Basic Problem?

Eurointelligence says “Technology is the main cause of the decline. Geopolitics is what accelerated it.”

Technology is not the problem. The Maastricht treaty that created the Eurozone is flawed. And it cannot be fixed without unanimous agreement

The EU Is Dysfunctional

In a single word, the EU is dysfunctional. That’s the problem, not technology. The Maastricht treaty itself is a big part of the reason the EU is dysfunctional. The Euro itself, with one common interest rate, is fundamentally flawed.

June 21, 2024:  Debt Brakes and Treaty Requirements About to Smash the EU.

The EU has launched an Excessive Debt Proceeding against France. It won’t stop there.

Hoot of the Day

To achieve a government debt-to-GDP ratio of 60 percent, EU countries will have to reduce spending or raise taxes by 2 percent of GDP, on average, every year for 46 years.

Let’s just say it’s not going to happen. But these clowns are likely to try, if for no other reason than punish Le Pen.

Nothing has been solved because nothing can be solved. It’s politically impossible.

The French government is about to collapse again with France nowhere close to meeting debt brake and fiscal compliance rules.

If any party gets a majority in the next election, it will regret winning. No one is willing or able to address the mandatory rules.

January 10, 2025: The Political Crisis in France Is About to Get Much Worse

The entire eurozone is in shambles, and Trump’s demands will accelerate the crisis. One seriously must wonder if that is his real goal.

Well, that was certainly accurate.

August 27, 2025: French Government on Verge of Collapse Over Debt Crisis, What’s Next?

A vote of confidence is scheduled. Expect the government to fall.

By August 27, 2025, everyone was making that call. No credit to latecomers.

The EU Has a Big Problem With Military Spending and Trump’s Definition

In case you missed it, please see my September 4, 2025 post The EU Has a Big Problem With Military Spending and Trump’s Definition

France currently spends 2.1 percent of GDP on defense. Italy spends 1.5 percent.

Trump demands 3.5 percent. See above link for details.

Currency Crisis Awaits

Nothing has been solved because nothing can be solved. It’s politically impossible.

I keep repeating the idea “a currency crisis awaits”.

However, things are so screwed up globally that a crisis can start anywhere. The EU, US, China, and Japan are all possibilities.

There is no fiscal sanity anywhere.

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