(Bloomberg) -- France’s new prime minister, Michel Barnier, made a plea for the country’s political factions to work together in order to move beyond the turbulence that’s caused so much chaos over the past two months.
The former Brexit czar for the European Union pledged to focus on issues important to the far right such as security and reducing migration in a nod to the central priorities of Marine Le Pen’s populist National Rally, though he didn’t mention her by name.
Barnier will speak with her, probably later on Thursday or Friday, according to a person familiar with his thinking, as he continues to consult with political leaders, as well as former presidents and prime minsters. Her party wields an unprecedented amount of power since snap elections were called in June.
“This is a new page in France’s history and this is something we need to broach with a sense of humility,” Barnier said in a speech Thursday in Paris as he started his new job.
He said it will require a great deal of listening, as well as respect between the government and parliament, and respect for all political forces. He repeated: “And I do mean: all the political forces represented here, starting this evening.”
Emmanuel Macron tapped Barnier, 73, to be France’s premier in a bid to move past the political uncertainty since legislative elections left the country with a hung parliament, with no political group holding enough seats to govern alone.
Barnier has largely avoided the bickering of front-line politics in recent months, giving him a chance of not being too unpalatable for any party. Since no political group has an absolute majority, any new government will be vulnerable to a no-confidence vote, which would force Macron to name a new premier.
The president in France is head of state, in charge of the armed forces and foreign policy, and nominates the prime minister and members of the government. The prime minister is in charge of the day-to-day implementation of policies and can be toppled by a no-confidence vote in the National Assembly.
Le Pen’s National Rally has emerged as a kingmaker in the negotiations, warning it would censure many of the other political figures whose names were touted for prime minister. But officials from the far right were more nuanced on Barnier, saying they could wait to see what policies he proposes.
“We demand that the new prime minister respect the 11 million French people who voted National Rally, that he respect them and their ideas,” Le Pen said on X. “We’ll pay close attention to his policies and we’ll be watchful that the aspirations of our voters, who represent a third of French people, are heard and respected.”
Shortly after Barnier was appointed, the chair of the National Assembly, Yael Braun-Pivet, called for an extraordinary parliamentary session for the new prime minister to present his priorities and face lawmakers’ questions.
Barnier listed priorities including access to public services, education, security, controlling immigration, and labor and living standards. But he also said the prime minister must confront “difficult truths,” including France’s financial and ecological debts.
While the new premier said he would continue Macron’s action to support industry and make France attractive to foreign investors, he also said he would make changes and shift away from a top-down style.
“The government won’t be so pretentious as to claim that it alone knows everything,” Barnier said. “I’ve learned in my long public career that good ideas come from everywhere, indeed often from the most humble of people, when you take the time to listen to them.”
Barnier faces the immediate challenge of forming a cabinet that can bridge the ideological rifts between the left, right and centrist blocs in parliament. Achieving a balance will be crucial to his ability to withstand no-confidence votes to smoothly adopt a 2025 budget in the coming weeks. Opposition parties in France have a tradition of voting against finance bills whatever the circumstances.
To avoid a majority of lawmakers uniting against him, Barnier must also find a way to navigate demands in other key policy areas including pensions and the minimum wage. A broad array of parties campaigned in the legislative elections on pledges to at least partly undo Macron’s 2023 law raising the retirement age, and increase household incomes through measures such as tax cuts and raising the minimum wage.
Macron’s centrist group, however, has vowed to resist efforts to unpick his pro-business reforms of the last seven years.
Financial markets are closely watching the political gymnastics in Paris. Even before the election in June, France’s budget was in the spotlight after the deficit swelled to 5.5% of gross domestic product in 2023, prompting S&P Global Ratings to downgrade the country and the European Union to instigate a procedure to enforce greater fiscal discipline.
France’s benchmark CAC 40 index closed down 0.92% on Thursday, the third straight day of declines.
“Markets will probably be relieved by prospects that France could finally find a new government after all,” said Commerzbank AG’s head of rates strategy, Christoph Rieger. “But not having seen or heard much of Barnier since Brexit we will wait to see what he stands for, and if he can survive no-confidence votes without major concessions to the left.”
When Macron dissolved the National Assembly in June after getting trounced by the far-right in EU elections, investors dumped French assets as they saw the risk of opposition parties triumphing and implementing costly manifesto pledges that risked further inflating the country’s debt. The premium France pays on 10-year debt compared with Germany’s surged and remains well above pre-election levels, while French stocks are yet to recover losses in comparison to the rest of the European Union.
Barnier will inherit a blueprint for the 2025 budget from the outgoing caretaker government with unchanged caps on spending that aim to help France meet a target to narrow its deficit below 3% of economic output by 2027. But the prime minister’s new team will have a free hand to make changes before presenting the bill by the start of October. France is also due to send medium-term fiscal plans to Brussels later this month under the EU’s revamped fiscal rules.
The New Popular Front, which campaigned on a platform of massive increases in spending, is likely to be Barnier’s biggest obstacle to consensus on public finances. Some of the group’s leaders have slammed Macron’s decision not to appoint the alliance’s candidate, Lucie Castets, as a “denial of democracy,” and others have said they would immediately propose a vote to bring down a government not from their own ranks.
--With assistance from Constantine Courcoulas and Tom Fevrier.
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