Filenews 6 December 2024 - by Lionel Laurent
France better protects its monuments than the workings of its own democracy. As Notre Dame Cathedral rises from the ashes as a symbol of unity in the face of adversity, Europe's second-largest economy faces unprecedented instability after far-right leader Marine Le Pen teamed up with the left to topple Michel Barnier's government and torpedo his budget. At a time when the entire region is vulnerable to Donald Trump's trade spikes and Vladimir Putin's war machine, what is happening in France is an unnecessary journey into the unknown.
Parliamentary chaos is revealing the wreckage of France's political landscape after successive shocks of the pandemic and inflation and the end of a strong period of economic growth and job creation. Barnier's plan to reduce the French deficit by saving €60 billion ($63.2 billion) was never going to appeal to the public, but shocking is the ease with which he became hostage to politicians more interested in the 2027 presidential election than in drafting the budget. By imposing red lines, demanding more anti-austerity measures and bringing down Barnier after just 89 days in office, Le Pen delivered a symbolic punch to the elites in power, but offered no real response to the demographic and productive decline the country is heading into.
These red lines of the far right are effectively turning into shackles for President Emmanuel Macron as he tries to fill the void with a new prime minister and restart the arduous march towards a functioning budget. France's parliament is stalled without a functioning majority, reflecting the image of an increasingly polarised society, and new elections are not possible until at least the middle of next year. And while ideally the national interest should take precedence, considering the €350 billion in debt and €40 billion in interest payments due next year, the alluring prospect of power in a winner-takes-all system does not allow politicians to escape the quest for easy victory and risky poker. If this leads to more social anger or unrest, Macron's position is in jeopardy.
The financial markets are currently treating this mess wisely, rightly so, as this is not a Greek or Italian-style euro crisis. The institutions of the Fifth Republic offer ways to keep the state functioning in an emergency, with the help and support of the European Union and the euro – ironic considering Le Pen's failed "Frexit" campaign to reject the single currency. There's also the Notre Dame effect: France's national wealth worth more than 680 percent of its GDP is a reassuring long-term counterweight to the current accumulated debt and political instability.
Still, the combination of rising borrowing costs in the market and emergency approvals of government spending every month is painful. It could bring about untargeted fiscal austerity, as Bloomberg Economics points out, that would shake the economy without reassuring investors worried about the debt trajectory in the long run. There is a huge risk of slow erosion digging deep into institutions and society: It's hard to imagine that interventionist France can function effectively amid looming paralysis, and both investment and growth are likely to take a heavy hit. Le Pen's apparent victory in the name of French purchasing power risks becoming a Cadmean victory.
As one of Europe's most important geopolitical voices and as the EU's only nuclear power, France's declining influence is as palpable as its bad timing. Trump's return to the White House and the prospect of a peace deal with Putin hanging over the heads of Ukrainians require a stronger Europe, more able to defend itself. Germany's governing coalition is collapsing, albeit with more optimism about what's to come than in France. The UK, which now looks vastly more stable than it did during Brexit, is going to be under enormous pressure to choose between Europe or the "high seas", as Winston Churchill put it. If Macron cannot unite France and steer it toward solving its own problems, the glorious reopening of Notre Dame may be all that remains of his legacy.
Performance – Editing: Lydia Roumpopoulou
