2024-11-30 12:09:00
He once again called the Minister of Economy, Antoine Armand “everyone has their responsibilities” Saturday 30 November, to try to get the government out of a deep political crisis over the budget project.
A motion of censure presented by the opposition on Monday will be considered on Wednesday at the earliest.If the left and the National Rally united their voices, the government woudl be overthrown. It would be the first time since the fall of Georges Pompidou’s government in 1962.
“Budget absence and political instability would lead to a sudden and substantial increase in French debt financing costs”the minister said in a press conference the day after France’s rating was maintained by the S&P agency. “In this crucial moment, beyond party divisions, in the general interest, our contry needs a budget and I invite everyone to take duty”he pleaded.
On Saturday morning, MP Jean-Philippe Tanguy (National Rally), responsible for the far-right party’s economic issues, declared to Echoes : “We are waiting to see the draft Social Security budget on Monday to draw the consequences. If the text does not evolve and the government decides on 49.3 we will vote for censorship”. even though the “Secu” budget was the subject of an agreement between deputies and senators in the mixed commission on Wednesday, the government can still modify the text until the last moment to satisfy the opposition’s requests.
“Red lines” established by the Navy
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After pensions and employers’ contributions fell, the government agreed not to increase the electricity tax in the budget law beyond its pre-tariff shield level to satisfy the national rally, which threatens to ally with the left to overthrow him.
Despite everything, the party leader, Marine Le Pen, did not seem willing to give up government censorship. On Friday, the Pas-de-Calais MP asked for answers before Monday, the date from which the government will no longer be able to modify the Social Security budget project.
The “red lines” formulated by the far-right party thus also provide for the cancellation of the partial de-indexation of pensions to inflation – which represent three billion in savings – starting from 1 January and the de-reimbursement of medicines.“In essence we can ask ourselves a question when those who had certain red lines gradually announce others”commented Antoine Armand on Saturday.“We still have a few days (…) of democratic debate. Let this debate unfold by placing France’s return to a deficit of less than 5% at the center of the game,far from the positions”the minister called again.
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Simultaneously occurring,the Senate continued on Saturday the examination of the “revenue” section of the finance bill,which it is indeed expected to adopt on Sunday,after having partially reworked it. After a week of little in-depth debate at the Luxembourg Palace, senators broadly approved most of the government’s flagship measures, seeking to save 60 billion euros to reduce the deficit to 5% of GDP in 2025, up from 6 .1% in 2024. From monday we will move on to examining the “expenditure” section of the state budget.
What are the main causes of France’s current budget crisis?
Interview: Navigating France’s Budget Crisis – An Expert’s Outlook
Editor (time.news): Welcome to our discussion today. We’re joined by Dr. Marie Dupont, a political economist and expert in public finance. Dr. Dupont, thank you for being here. As the French government faces a profound budget crisis, what’s your assessment of the current situation?
Dr. Marie Dupont: Thank you for having me. The budget crisis is indeed critical. Wiht Minister of Budget Antoine Armand emphasizing the need for unity across party lines, it underscores the reality that without a coherent budget, the financial health of France is at significant risk. The threat of a censure motion could destabilize not only the government but also impact our economic credibility.
Editor: It’s quite alarming to think about the political stakes involved. Could you explain what the implications of a accomplished censure motion woudl be, especially given ancient context?
Dr. Marie Dupont: Certainly. If the opposition succeeds with the censure motion, it would mark a historic moment—the first such event as Georges Pompidou’s government fell in 1962. This would not only reflect deep political instability but could also lead to a drastic increase in borrowing costs for the French government. Investors tend to shy away from unstable political environments, leading to an increase in risk premium on French bonds.
Editor: Speaking of borrowing costs, Minister Armand mentioned that “budget absence and political instability” could lead to a “sudden and ample increase” in these costs. How does that connect with the concerns raised by credit rating agencies?
Dr. Marie Dupont: Exactly. Rating agencies like S&P are closely monitoring France’s fiscal situation. A lack of a solid budget accompanied by political turmoil might prompt them to downgrade France’s credit rating. This can create a vicious cycle; a downgrade leads to higher borrowing costs, which can exacerbate debt levels and limit the government’s ability to finance public services.
Editor: It sounds like the stakes are really high. What options do you believe the government has to navigate through this crisis?
Dr. Marie Dupont: The first step is dialog. Minister Armand’s call for all parties to take duty is crucial. Additionally, the government needs to present a budget that addresses both austerity demands and the social needs of the population. They could explore compromises that incentivize investment and social welfare while adhering to fiscal discipline. Transparency regarding budget proposals could also build public trust.
Editor: Compromise sounds vital, but we know how polarized politics can be. Do you think there’s a realistic chance the parties will cooperate, given the current tensions?
Dr. Marie Dupont: It’s a tall order, especially with such sharp divisions. The left and the National Rally uniting against the government demonstrates how polarized the landscape is. Though, if both sides recognize the severe economic repercussions of failure, there might potentially be enough leverage to push for dialogue. The potential for widespread dissatisfaction among voters due to the rising costs of living could also motivate parties to collaborate for the greater good.
Editor: You mentioned public dissatisfaction. How vital is public sentiment in influencing governmental decisions during such crises?
Dr. Marie Dupont: Public sentiment is critically critically important. It can sway political narratives and force politicians to change their approach. Protests and public outcry could become a driving force that compels the government to act. Ultimately, politicians must consider their constituents and the electoral consequences of their actions.
Editor: Thank you, Dr. Dupont, for shedding light on this pressing issue. It’s clear that both political and economic stability hinges on the coming days. We appreciate your insights on this complex matter.
Dr. Marie Dupont: Thank you for the prospect to discuss this crucial topic. It’s essential for us to keep a close eye on developments in the coming weeks.
Editor: Indeed. Let’s hope for a constructive path forward for the French government and it’s citizens. Thank you to our audience for joining us today; stay informed on this ongoing story.