Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today
Already have an account? log in
Budget Blackmail
Even if the current French government doesn't collapse this week, Michel Barnier's brush with a no-confidence vote testifies loudly to the impossibility of governing while beholden to France's far-right.
As discussed here at some length last week, Emmanuel Macron's bid to thwart Marine Le Pen and Jordan Bardella in snap legislative elections earlier this year came full circle pretty quickly: The French left's strong showing in the vote meant Macron's pick for prime minister, Barnier, would like
This is “high stakes” poker. If LePen threatens to topple the government, she potentially loses credibility (although predominantly with the portion of the French who would never vote for her under any circumstance) or she caves and loses credibility with her voters.
I personally hope that the Euro can withstand this pressure, but without the ability to print euros, the French budget deficit (approaching 7% of GDP) is going to need some combination of serious expense reductions and tax increases. The extremely wealthy French just finished funding the $1B of renovations for the Notre Dame- but they might next be called upon to save France’s ability to utilize the euro.