French assembly ousts PM Bayrou in confidence vote

by · UPI

Sept. 8 (UPI) -- French Prime Minister François Bayrou on Monday failed a confidence vote held by the National Assembly, which said the leader must now resign.

The legislature voted 364-194 against Bayrou in a vote he called in a bid to force drastic spending cuts of $51.6 billion.

"The National Assembly has not approved [the PM's] general policy statement," National Assembly President Yaël Braun-Pivet said in announcing the results. "The prime minister has to submit the resignation of the government to the president of the republic."

The Elysée Palace said French President Macon plans to appoint a new prime minister in a "matter of days," according to the BBC.

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Macon plans to meet with Bayrou on Tuesday to accept his resignation, according to France Info. The outlet said Bayrou will remain in his position until his replacement is announced.

Marc Fesneau, leader of Bayrou's Democratic Movement party, said political leaders must find a way to work together.

"There are people who want chaos, who want to block economic activity, that won't allow the country to get out of an economic crisis," he said. "That is not our position; we are for responsibility and truth."

Bayrou has been waging an uphill battle to pass his deeply unpopular 2026 budget, which seeks to tackle France's ballooning national debt with spending cuts, axing two public holidays and a freeze on most welfare benefits.

The centrist leader wanted to slash 1.2% from the deficit as a percentage of GDP, reducing it to 4.6% in the next financial year, even as that will still leave France in breach of European Union rules mandating that states that use the euro keep budget deficits to a maximum 3% of GDP.

He framed the confidence vote as existential, calling it a "grave and urgent" time for France.

The collapse of Bayrou's minority government after nine months in office could trigger a political crisis in Europe's second-largest economy.

Macron faces having to appoint another prime minister to manage domestic matters -- national security and foreign policy are the preserve of the head of state -- with no change in a legislature gridlocked along ideological lines.

"This crisis was provoked and fueled by President Emmanuel Macron and all those who have served him. Today, because of them, France is the sick man of Europe," said far-right National Rally party leader Marine Le Pen.

Left-wing parties, the largest grouping in parliament but lacking a majority, were urging Macron to select a prime minister from their ranks as the only solution to the crisis.

"[Macron] can't go against the results of the polls a third time," said Green Party leader Marine Tondelier.

However, right-leaning Les Republicains, part of Bayrou's Democratic Movement-led coalition, rejected that idea outright with leader and Interior Minister Bruno Retailleau saying there was no chance his party would accept a socialist candidate.

The fall of Bayrou's government so soon after the fall of the administration of predecessor Michel Barnier in December was not likely to be well received by global financial markets, with knock-on effects for France's borrowing costs.

In Monday morning trade, the yield on the government's 30-year bond was running at 4.35% and the 10-year bond yield was 3.43%.

Former Bank of France Governor Jean-Claude Trichet told CNBC that France was facing the double whammy of "a difficult situation in terms of fiscal balance and a very difficult situation, politically."

"I understand that the prime minister wanted to put all political parties in front of their responsibility in terms of asking them to recognize that there was a problem. Unfortunately, for political reasons, the extreme right and the left, including the Socialist Party, decided that it was not in their political interest to play the game of continuing with Bayrou.

"You can already consider that Bayrou is no [longer] the prime minister," Trichet said.