French Lawmakers to Vote on No-Confidence Motions

PARIS (Reuters) – French lawmakers will vote on Wednesday on no-confidence motions likely to oust the government, deepening the political crisis in the euro zone's second-largest economy.

Barring a surprise, Prime Minister Michel Barnier's government will be the first ousted by a no-confidence vote in over 60 years, as France grapples with a massive budget deficit.

In a TV interview on Tuesday, Barnier expressed hope for survival ahead of the vote scheduled for the evening, following a 4:00 p.m. (1500 GMT) debate.

However, the far-right National Rally (RN) announced its intention to ally with left-wing parties to displace Barnier's government. Together, they possess sufficient votes to achieve this goal.

When asked about potential consequences, RN lawmaker Laure Lavalette remarked, "There is no reason this leads to major chaos. Don't play with fears … it's not all going to crumble."

Interior Minister Bruno Retailleau commented to CNews, stating, "Nothing's over until the vote but we can see we're headed towards a censorship (of the government)."

The anticipated collapse of Barnier's government will leave a void in the European Union, especially with Germany also facing its own challenges, just weeks ahead of U.S. President-elect Donald Trump's return to the White House.

Following the no-confidence vote, President Emmanuel Macron may request Barnier to remain in a caretaker role as he searches for a new prime minister, which could unfold next year.

Economic analysts note that despite warnings from Barnier about a financial storm, bond investors may mitigate immediate risks to France. However, the political turmoil could adversely impact businesses, consumers, and taxpayers.

Christian Kopf, head of fixed income and FX at Union Investment, stated, "This is a slow-burning crisis which will lead to an ongoing widening of spreads and deterioration of sovereign creditworthiness," adding that he does not foresee an outright sovereign debt crisis at this point.