(Bloomberg) -- Marine Le Pen’s ultimatum to French Prime Minister Michel Barnier, even after he caved on a key demand from her party, lays bare the unprecedented clout the far-right leader now wields in Paris’ halls of power.
Following weeks of hardening threats to bring down Barnier’s government in a no-confidence vote, the French premier on Thursday dropped plans to raise taxes on electricity in 2025, in what is a key budget concession.
It wasn’t long before the longtime face of the French far right flexed her muscle again with yet another threat over her demands that Barnier adjust the budget: “Today is Thursday. He has until Monday,” Le Pen told Le Monde.
Le Pen’s National Rally is requiring that Barnier further tweak his 2025 budget, which incorporates €60 billion ($63.5 billion) of fiscal adjustments, to abandon a proposal to reduce drug reimbursements and call a moratorium on new or higher taxes on most individuals, among other asks.
The emboldened Le Pen has dominated the French media landscape for days — a political moment that is a far cry from her party’s relegation in the second round of the legislative elections this summer, when a coalition comprising the center-left and far-left parties coalesced to keep her out of power.
Le Pen is now the ultimate power broker in Paris.
And she relishes the role — in which she has effectively rendered other political players subordinate.
As the nation braces for what could be a roller coaster week starting Monday, the uncertainty has pushed investors to sell French assets, driving up the country’s borrowing costs compared with European peers. France’s 10-year yield premium over Germany, a closely watched gauge of risk, rose Friday to about 84 basis points.
The political difficulties and market jitters began in June when President Emmanuel Macron called snap elections in a bid to bring clarity in a National Assembly where his party was already short of an outright majority.
The gamble backfired, leaving the lower house split into three fiercely opposed blocs: A diminished center supporting the president, a leftist alliance, and a strengthened far-right led by Le Pen.
The leftist bloc — the New Popular Front — has pledged to propose no-confidence votes if the government uses a constitutional provision called 49.3. But only the combined votes of the left and the far right on a motion of censure tabled by one or the other would be able to evict the government. That has given far-right leader Le Pen and her lawmakers the role of de-facto power broker. Her National Rally is the single biggest party in parliament.
What Bloomberg Economics Says...
“Getting the budget through parliament and the survival of Prime Minister Michel Barnier’s cabinet will likely depend on the decisions of far-right politician Marine Le Pen.”
—Antonio Barroso, Eleonora Mavroeidi. For full insight, click here
The National Assembly will start reviewing the social security portion of the budget bill on Monday. Barnier could use article 49.3 to adopt the bill without a vote. That will open the door to being toppled by a no-confidence vote as early as Monday — unless Le Pen abstains.
Le Pen is now not just seeking amendments to the 2025 budget in exchange for her abstaining in a no—confidence vote, but also that Barnier show “respect” for her party’s voters by spelling out loud that he’s making concessions to please them.
“Avoiding saying that he respects RN voters is the best way to keep our voters asking us for censure,” Le Pen told Le Monde.
The full-frontal power moves by the far-right leader in recent days also stand in stark contrast to her political fragility as a presidential hopeful. She risks missing out on the nation’s next presidential race altogether after prosecutors sought an immediate five-year ban on her running for office at the end of an embezzlement trial in which she is accused of misusing EU funds. A ruling in the case will be delivered on March 31.
According to recent polls however, Le Pen remains a frontrunner in the 2027 French presidential election. Le Pen’s move from fringe to front of pack has been due in large part to her willingness to renounce her political heritage: where the overt racism of her father Jean-Marie Le Pen consigned him, over a long career, to no better than a distant second place, she has sought to soften some of his more divisive rhetoric and to reassure business over her economic policies.
The power broker status is in sharp contrast to Le Pen’s lows in 2017, when memes lampooning her debate performance versus Macron — her true nemesis — flooded the internet. It is also the result of years of careful work to “de-demonize” her party, at a time when her ideas are becoming increasingly mainstream, with far-right leaders grabbing power across the globe.
In a financially weakened, politically divided France, Le Pen continues to reap the benefits by exploiting concerns around purchasing power and immigration.
--With assistance from William Horobin.
©2024 Bloomberg L.P.