(Bloomberg) -- Marine Le Pen and France’s far right have never been closer to the levers of power in Paris with President Emmanuel Macron’s incoming government forced to rely on the implicit backing of the nationalist group.
After weeks of hesitation and uncertainty, the French president chose conservative Republican politician Michel Barnier, the European Union’s former Brexit negotiator, to form the next administration.
In the end, it came down to finding someone palatable enough to the leader of the far-right National Rally to avoid being toppled by a no-confidence vote in the lower house of parliament.
“It took them a while to realize that they needed to take into account the votes of 11 million French people in their calculations to find a government,” the party’s first vice president, Perpignan Mayor Louis Aliot, told Bloomberg.
Macron took office in 2017 on a wave of support for his pledge to move beyond the dogmatic limitations of traditional parties and act as a bulwark against extremism. Yet, like elsewhere in Europe, the political center has fragmented while parties on the far-left and far-right have become kingmakers in creating coalitions to govern.
Macron called a snap vote after his group was trounced by the National Rally in European Parliament elections in June. Rival parties struck deals to revive the traditional “Republican Front” to keep out the far right in runoffs after polls put it in the lead. But while a left-wing alliance won the biggest number of seats in the National Assembly, no one group secured a majority, and Le Pen’s became the largest single party.
Having rejected the candidate proposed by the leftist New Popular Front, the president — whose role it is to appoint a prime minister — sought someone who could gather broad support and survive a no-confidence vote.
Political-party math means that Barnier’s administration can survive such a motion with the support of centrists and conservatives, and the tacit acceptance of the National Rally. The New Popular Front, which has said it will censure the new government, has only 193 out of 577 seats, far short of the absolute majority needed to bring it down.
Left-leaning former prime minister Bernard Cazeneuve and the conservative head of the northern Hauts-de-France region, Xavier Bertrand, were both in the running until the last minute. However, when the National Rally made it clear it would censure both — as had the New Popular Front — Macron was forced to acknowledge they had no chance of staying long in the job.
After Barnier’s appointment was announced, Le Pen quickly told LCI television he seemed to “match the first criteria we had defined — that is, a man who’s respectful of all political forces and capable of talking to the National Rally.”
“That will be useful because compromises will need to be found given the budget situation of our country,” she said.
A global bond rally, bolstered by bets on aggressive rate cuts from the Federal Reserve, has helped drive down French borrowing costs markedly over the past few weeks. The 10-year yield on Friday fell to 2.86%, the lowest level since April. That’s a step change from the volatility that preceded the snap election and which saw the extra yield investors demand to hold French debt climb to 86 basis points over safer German bonds.
The new premier’s most urgent priority will be a budget bill for next year, which must be presented to parliament for debate by the first Tuesday of October. This is complicated by the fact that opposition parties in France have a tradition of voting against finance bills whatever the circumstances.
What Bloomberg Economics Says...
“Given Barnier’s background, we expect that maintaining some fiscal discipline and earning market confidence will be a key objective. Still, with no majority in the National Assembly and political discontent running high, that won’t be easy to achieve. The Finance Bill for next year will be his first test and an important step to watch.”
—Eleonora Mavroeidi and Maeva Cousin (Economists). Click here for full REACT.
“There’s a bit of irony in all this,” National Rally Vice-President Sebastien Chenu told BFM TV on Thursday. After being shunned by the French political establishment, “today, we’re basically being courted.”
He said the former Brexit negotiator “embodies a person who is submissive to the European doctrine” but called him “rather respectful of the National Rally.”
Barnier shares at least some ideas with Le Pen.
When he was hoping to run for president by competing in the Republican party primary in 2021, Barnier pledged to organize a referendum on immigration. He later said France should be able to bypass EU law to reduce immigration for the sake of “national security,” echoing similar proposals by Le Pen.
Like her, he has slammed what he called “Macronism” for its excessive centralization and its ambition to “erase everything between him and the extremes.”
Le Pen’s newfound role of kingmaker is frustrating some of Macron’s allies, who point out the irony of effectively giving her veto powers after the Republican Front held in the elections.
“We’re making the RN the chief censor or not of a future PM,” Astrid Panosyan-Bouvet, a lawmaker in Paris, said on X the day before Barnier’s appointment. “We must free ourselves from the censure” of the National Rally and far-left France Unbowed “to find a common path that is republican, democratic and European.”
Still, Eleonore Caroit, a lawmaker from Macron’s party, told Bloomberg it would be “counterproductive” not to talk to the far-right party, given its strong result in the election.
“It would sound like a denial of democracy,” she said.
--With assistance from James Hirai.
©2024 Bloomberg L.P.
