Her Prime Minister, François Bairu, passed today (03.02.2025) from the lower parliament the bill for him of 2025, using a constitutional provision that will cause a vote of mistrust likely on Wednesday. France has already stated that it will submit the proposal of mistrust on the basis of the budget. The Socialist leadership said today that it would not support the proposal, which – if the party members follow the “line” – will keep the government from collapsing. CORVERSE Marin Le Pen’s anti-immigration National Alert has yet to give a clear indication of how to vote. A party spokesman said he would announce his plan Wednesday afternoon, according to Bloomberg. French politics has been in turmoil since French president, Emmanuel Macron, declared early elections last summer, which divided the National Assembly into three rival blocks. The National Alarm became the only largest party in the Lower House, pushing Le Pen into a position of unprecedented influence. France does not currently have a full annual budget and depends on emergency legislation to avoid the State’s shutdown. The previous budget plan for 2025 was rejected with the collapse of the Barnier government, when it tried to move from parliament 60 billion euros in tax increases and spending cuts to reduce the deficit to 5% of GDP from around 6.1% in 2024. CORVERSE The final form of the budget proposal for 2025 was agreed on Friday, when a parliamentary committee reached agreement on the bill. The Bairu government targets a slightly smaller adjustment based on 50 billion euros of savings to reach a 5.4% deficit in 2025. Investors will carefully assess Bayru’s options after months of “dumping” French assets due to concerns about the increase in deficits and political instability. Market reaction Bond buyers saw positive budgetary movements recently and consider that they are now properly paid for the risks of political deadlock, Bloomberg said last week. But French assets faced a difficult route through political turmoil. In 2024, French state debt generated losses of 0.5%, making France the only country in the region with a negative return on its state debt, according to Bloomberg’s index. The shares also sub-subsidised, with CAC 40 yielding less than 1% versus nearly 10% for the Stockx 600 index.
France – Budget: Exceptionally in the lower House the bill – vote of censure Wednesday
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