Speaker 1: Bloomberg Audio Studios, podcasts, radio news. In France on Wednesday,
Speaker 1: President Emmanuel Macrone's government lost a no confidence vote. Politicians
Speaker 1: on the right and the left called for that vote
Speaker 1: and supported it after Prime Minister Michel Barnier pushed through
Speaker 1: a budget without parliamentary support. Crisis on the brink as
Speaker 1: France's government faces a vote of no confidence. Barnier has
Speaker 1: recently falls through a budget bill without a vote.
Speaker 2: Is collapse now imminent for this French government? Well?
Speaker 1: That no confidence vote effectively ended Barnier's short tenure as
Speaker 1: Prime minister. Barnier addressed the nation just before the vote,
Speaker 1: calling it an honor to have served with dignity France
Speaker 1: and its people. He'd been on the job for just
Speaker 1: under three months.
Speaker 2: Chu dircus restauranuri a.
Speaker 1: La Today day, there are a lot of questions about
Speaker 1: the future, big ones about President Macron's prospects, what happens
Speaker 1: to his political party, and what's next for France.
Speaker 2: No government has fallen to one of these motions of
Speaker 2: no confidence since nineteen sixty two.
Speaker 1: Bloomberg Stephen Carroll has been in Paris to cover the
Speaker 1: vote and its fallout.
Speaker 2: That time around, it was solved by calling early parliamentary elections.
Speaker 2: But this time around President Macron doesn't have that option
Speaker 2: because he already did it this year, vuding France into
Speaker 2: the political and potentially economic unknown.
Speaker 1: I'm David Gura, and this is the big take from
Speaker 1: Bloomberg News today on the show Turbulence and Uncertainty in France.
Speaker 1: After the government was toppled. What led to the vote
Speaker 1: and what do we know about what comes next? Moments
Speaker 1: after the vote, I caught up with Bloomberg Stephen Carroll
Speaker 1: asked him to walk us through what happened. Get us
Speaker 1: up to speed here. What was the outcome of the vote?
Speaker 2: Well, look, Michel Barnier has added an unhappy records to
Speaker 2: his long career. That is, he is the shortest serving
Speaker 2: prime minister in modern French political history, just two months
Speaker 2: and twenty nine days in office, as he was felled
Speaker 2: by a vote of no confidence in Parliament. Three hundred
Speaker 2: and thirty one deputies voted against him and needed two
Speaker 2: hundred and eighty eight for the motion to pass.
Speaker 1: Stephen mark this moment for us, you're kind of nodding
Speaker 1: to the historic nature of this. What does it mean
Speaker 1: for the country moving forward?
Speaker 2: It plunges France into a relative political unknown. I say
Speaker 2: relative because this has happened once before in nineteen sixty two,
Speaker 2: but the way out of that particular crisis was calling
Speaker 2: early legislative elections. Emmanuel Macron doesn't have that choice this
Speaker 2: time around because he did that last June, which means
Speaker 2: he can't call new ones until next July. So for
Speaker 2: the moment, it means that France has no government. There
Speaker 2: will be caretaker ministers in place. Emmanuel Macron needs to
Speaker 2: find somebody new to take on the impossible check challenge
Speaker 2: as it now looks, of being Prime minister and trying
Speaker 2: to cobble together some sort of working majority or minority
Speaker 2: in Parliament, which on the mats looks very difficult. There
Speaker 2: isn't an easy constituencies to win over, so that means
Speaker 2: no policy making for the moment, no budget for twenty
Speaker 2: twenty five. Once we go past the thirty first of December,
Speaker 2: we get into a special arrangement where essentially the French
Speaker 2: government keeps the lights on and works month to month,
Speaker 2: but that could potentially cause further concerns on markets, but
Speaker 2: also it could see them falling foul of the European
Speaker 2: Union it's already under watch for what the EU calls
Speaker 2: an excessive deficit procedure because its deficit is too high.
Speaker 2: Well that depthit's going to get even bigger.
Speaker 1: Now, this of course was something of great popular interest,
Speaker 1: of interest to investors as well. I know you've been
Speaker 1: paying attention to that. What was the market reaction the
Speaker 1: run up to the vote and what have we seen since?
Speaker 2: Well, look, in the days running up to it, there
Speaker 2: were a number of again unhappy records that we saw
Speaker 2: on French market. So the spread of borrowing costs between
Speaker 2: France and Germany widened to the most since twenty twelve,
Speaker 2: that was the height of the Eurozone crisis. And it's
Speaker 2: always the way that we think about debt in the
Speaker 2: euro Area. Germany is considered the safest bet. So the
Speaker 2: further away you are from Germany when it comes to
Speaker 2: borrowing costs, essentially the worst perception that investors have in you. Now,
Speaker 2: our colleagues who are experts in the markets will also
Speaker 2: point out that France's ten year borrowing cost is still
Speaker 2: below three percent. It's two point nine percent or in
Speaker 2: and around there, and that still means that you know,
Speaker 2: if you're going to get a mortgage in France. You're
Speaker 2: still going to get a pretty good rate on a
Speaker 2: fixed rate mortgage because French mortgages are fixed for the
Speaker 2: whole lifetime of around three percent, which looks pretty good
Speaker 2: if you're sitting in the UK or in the US.
Speaker 2: The other reaction that we've seen on markets has been
Speaker 2: in the Euro weakening further, but difficult to unpick exactly
Speaker 2: how much of that is around France because dollar strength
Speaker 2: has been such a theme of recent weeks as well.
Speaker 2: We've got the euro hovering around one and you do
Speaker 2: have to look for some further sort of more outlandish
Speaker 2: calls for anyone who sees that going back to party,
Speaker 2: at least in the short term. The actual reaction once
Speaker 2: the vote happened a bit of a shrug from markets
Speaker 2: they'd seen it coming. We're not expecting any major moves
Speaker 2: on the back of that. We'll be watching French equities
Speaker 2: to see if French banks are put under further pressure.
Speaker 1: Stephen, this vote came after a string of speeches. What
Speaker 1: did we hear in the run up to the vote?
Speaker 1: Who were the key players who's spoken? What did you
Speaker 1: take away from what they had? The same?
Speaker 2: So we heard from the leader of the far left
Speaker 2: party in Parliament, Eric Correll, and also from Mamine le
Speaker 2: Pen from the far right. They were very keen to
Speaker 2: point to this being an unfair budget, a budget that
Speaker 2: was not what they wanted to see from a government
Speaker 2: and as they saw it hurting the French people. Lots
Speaker 2: of rhetoric and high rhetoric as you'd expect from French
Speaker 2: politicians when given this sort of pulpit, knowing well that
Speaker 2: they had the numbers to topple Michel Bargnia. Michel Barnier
Speaker 2: himself had the chance to defend himself in Parliament before
Speaker 2: the vote was called, calling this a moment of truth
Speaker 2: and a moment of responsibility for the country.
Speaker 1: Introduce us to Barnier. What's this background? Why did Macron
Speaker 1: choose him as Prime minister?
Speaker 2: Michelle Barnier has been a fixture of French politics for
Speaker 2: some fifty years. It was the late seventies when he
Speaker 2: was first elected as an MP for the Utsavoir region
Speaker 2: where he's from and the veteran around the French Alps,
Speaker 2: and he's someone who's served as a minister in previous governments.
Speaker 2: He was a member of the center right Republicans party
Speaker 2: here in France. He went on to a career in
Speaker 2: the European Union as a European Commissioner and also the
Speaker 2: EU's chief negotiator on Brexit. He was a bit of
Speaker 2: a surprise choice for Emmanuel Macron to bring in as
Speaker 2: Prime Minister. They're not from the same political family, but
Speaker 2: in Michel Barnier, he was looking for somebody who was
Speaker 2: perhaps not in the fray of day to day politics,
Speaker 2: someone who might be able to bring together forces that
Speaker 2: weren't traditionally inclined to support Emmanuel Macron's group in Parliament,
Speaker 2: and also leaning in to his legendary negotiation skills. We
Speaker 2: learned this during Brexit that he was an extremely astute negotiator.
Speaker 2: He used the phrase so often during the Brexit negotiations
Speaker 2: that time is ticking, and really time was ticking from
Speaker 2: Michelle Barnier from the moment that he took up this
Speaker 2: job in September. He felt he'd achieved the best compromise possible,
Speaker 2: but didn't have the numbers to vote it through, and
Speaker 2: that's what's led us to this no confidence vote.
Speaker 1: In his speech, Michelle Barnier said he was sure that
Speaker 1: the no confidence vote would quote make everything more severe
Speaker 1: and harder coming up, the fiscal and political problems France
Speaker 1: is facing and what's likely to happen next. France's government
Speaker 1: has lost a no confidence vote, the first one in decades.
Speaker 1: I called up Bloomberg Stephen Carroll and asked him to
Speaker 1: explain how we got here and what this outcome means.
Speaker 1: What kicked all this off was that decision by Prime
Speaker 1: Minister Michelle Barnier to push through a budget for twenty
Speaker 1: twenty five without parliamentary support. That is what led to
Speaker 1: Wednesday's vote. What made this budget, the budget Michelle Barnier
Speaker 1: pushed through parliament so unpopular, so.
Speaker 2: It wasn't an easy task to begin with. There were
Speaker 2: lots of individually unpopular measures in this to do with
Speaker 2: the reimbursement of medical costs provided by the state. Currently,
Speaker 2: and most controversially, was this idea of pensions. In France,
Speaker 2: state pensions go up every year in line with inflation,
Speaker 2: and one of the things Michelle Barnier tried to do
Speaker 2: to save money was delay that increase for pensioners that
Speaker 2: would have been due to come into force from the
Speaker 2: first of January until later in the year. Essentially just
Speaker 2: trying to save a bit of money by implementing that
Speaker 2: increase a bit later on, and that was one of
Speaker 2: the red lines that Marie Lapenn had in her negotiations
Speaker 2: with Michelle Barnier running up to this particular crisis point,
Speaker 2: and that's proved to be one of the most controversial
Speaker 2: measures that he was trying to pass.
Speaker 1: On the heels of this no confidence vote, President Macron
Speaker 1: can't call for another special election until next summer. What
Speaker 1: is likely to happen next here there.
Speaker 2: Are a couple of deadlines that we have to worry about.
Speaker 2: One of them is that the budget needs to be
Speaker 2: passed by the end of the year. Now, there isn't
Speaker 2: a US style government shutdown on the cards for France,
Speaker 2: but it does enter relatively untested territory where there is
Speaker 2: an emergency provision which allows taxes to be collected, minimum
Speaker 2: services to be provided, welfare benefits to be paid, for example,
Speaker 2: but will make things very difficult in the running of
Speaker 2: the country because it's essentially just maintaining the nature and
Speaker 2: the business of the state without being able to make
Speaker 2: any strategic decisions.
Speaker 1: Stephen says the outcome of the no confidence vote has
Speaker 1: also raised questions about what's next for the far right
Speaker 1: leader Marine la Penn and the National Rally party.
Speaker 2: She's been building her political capital in France, you know,
Speaker 2: for more than ten years, essentially trying to make a
Speaker 2: bid for the presidency. She came pretty close last time around. Now,
Speaker 2: Emmanuel Macroon's term runs until twenty twenty seven. He's shown
Speaker 2: no signs that he will resign early. Marie Leapen herself
Speaker 2: is facing a court decision that's due to come in
Speaker 2: March of next year, which could see her barred from
Speaker 2: running in future elections.
Speaker 1: Lapen and National Rally have been accused of embezzlement, of
Speaker 1: misappropriating funds from the European Union. She denies all wrongdoing,
Speaker 1: but prosecutors have asked a judge to ban Leapen from
Speaker 1: holding public office for five years.
Speaker 2: That's something that could be preying on her mind, is
Speaker 2: if she's trying to force Emmanuel Macron to call an
Speaker 2: early presidential election, something that he can still do. Looks
Speaker 2: very unlikely at this point, but that's one theory that's
Speaker 2: being bandied around by French political commentators that perhaps Marie
Speaker 2: Lapenne has decided to cash in the chips of her
Speaker 2: political capital and try and force Emmanuel Macron into an
Speaker 2: impossible situation, Steven, As you.
Speaker 1: Say, Macron is resisting any calls to resign early. What
Speaker 1: does this mean for him and for his party?
Speaker 2: It puts them in a very difficult position. There are
Speaker 2: a number of figures who are lining up to try
Speaker 2: and replace Emmanuel Macron as the presidential candidate for his
Speaker 2: party in twenty twenty seven, because he'll have served his
Speaker 2: maximum number of terms as president, but it's very difficult
Speaker 2: to see who their constituency will be by that time.
Speaker 2: This budget crisis has reminded voters and politicians that there
Speaker 2: are other parties out there. There are other political forces
Speaker 2: at play, and for now they look more powerful. So
Speaker 2: how a government can proceed between now and twenty twenty
Speaker 2: seven is very unclear. What can they do? What compromises
Speaker 2: would that government have to make with Mary Lapenn's party
Speaker 2: or with the left wing parties to try and pass
Speaker 2: a budget and continuing even minimum functioning.
Speaker 1: One possibility, Stephen says is that the next prime minister
Speaker 1: could choose to build an alliance with the Socialist Party.
Speaker 2: They picked up a lot of seats in the last
Speaker 2: election and they represent one of the biggest parts of
Speaker 2: this left wing alliance. The difficulty will be trying to
Speaker 2: convince them to separate themselves from the hard left parties
Speaker 2: and potentially sign their own political death sentence by going
Speaker 2: into power with the Centrists and the center right. There'll
Speaker 2: be many people in that party who would be wary
Speaker 2: of this as an option, but looking at the numbers,
Speaker 2: really it does seem like the most likely option if
Speaker 2: you were to try and build a coalition. Of course,
Speaker 2: plenty of convincing to be done there. But even in
Speaker 2: the rhetoric that we heard from lawmakers from Macron's party
Speaker 2: in the days running up to this no confidence vote,
Speaker 2: they mention over and over again the stalwart reputation of
Speaker 2: the Socialist Party in French politics and their long history
Speaker 2: of government. They're trying to appeal to them to peel
Speaker 2: away from that left wing alliance and join into something
Speaker 2: that could form a functional government. For the moment, that's
Speaker 2: the only option that looks possible without some major political
Speaker 2: shifts from the parties involved.
Speaker 1: We've talked about what this means for politicians and political parties,
Speaker 1: how about for the country itself.
Speaker 2: People in France are worried about, like everywhere else, the
Speaker 2: cost of living and public services. There's very little hope
Speaker 2: out there that this impasse, however it is resolved, will
Speaker 2: actually lead to people's needs being addressed, their wants being
Speaker 2: addressed by the next government. It's very difficult to try
Speaker 2: and see how someone, any political figure could inspire the
Speaker 2: sort of hope that Emmanuel Macron did when he arrived,
Speaker 2: you know, into the presidential race late in twenty seventeen.
Speaker 2: That sort of uniting figure hasn't been found really by
Speaker 2: any party in recent elections. Marie Lapenn has a large
Speaker 2: constituency on the right, Jean Luke Manlauchamp has a large
Speaker 2: constituency on the far left, but neither have been quite
Speaker 2: big enough to either break through and make it to
Speaker 2: the presidentency or to be able to form a sufficient
Speaker 2: number of alliances in Parliament to become a prime minister.
Speaker 2: This leads to an interesting question about who will own
Speaker 2: the center by the end of this political cycle. There
Speaker 2: are plenty of players out there, but there's still a
Speaker 2: lot of questions about how anyone can win over and
Speaker 2: address the concerns that French people have about their future
Speaker 2: in a more uncertain world.
Speaker 1: This is the big take from Bloomberg News. I'm David Gura.
Speaker 1: This episode was produced by David Fox. It was edited
Speaker 1: by Tracy Sanielson and Ergol O'Brien. It was fact checked
Speaker 1: by Adriana Tapia and mixed and sound designed by Alex Sagura.
Speaker 1: Our senior producer is Naomi Shaven. Our senior editor is
Speaker 1: Elizabeth Ponso. Our executive producer is Nicole Beemster. Bor Sage
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Speaker 1: Thanks for listening. We'll be back tomorrow.
Speaker 2: Can you see