Michel Barnier’s resignation as French prime minister creates a crisis of political uncertainty and economic risk for France at a difficult time of transition for the European Union and its place in a rapidly changing world. Germany’s role as France’s established partner in driving the EU is questioned too as it faces a general election in February amid a stuttering performance of its export-based economic model. This comes just as the EU’s new Commission takes office with a challenging agenda requiring common purpose for internal reform and external direction.
The French political crisis revolves around President Emmanuel Macron’s decision to call snap elections for the National Assembly following the defeat of his own political party by the National Front in the European Parliament elections. His hopes for a majority opposed to its leader Marine Le Pen were dashed when victory went to the left-wing alliance looking to form a government. Macron could not do that and preserve his pro-market economic and prudent fiscal policies.
France was split an irreconcilable three ways between Le Pen’s far-right bloc, Macron’s centrists and the left alliance, which Barnier’s political skills could not bridge. He will stay in a caretaker capacity until a successor is appointed.
Barnier’s efforts to resolve the impasse tilted him to the right but his insistence on austerity measures to tackle the state’s 6.1 per cent budget deficit led to Le Pen voting for the left’s no-confidence motion creating an anti-government majority. New elections are ruled out until next June and in a defiant address to the French people yesterday evening Macron said he would stay as president until 2027. He said he would shortly appoint a new prime minister – but a period of great political uncertainty lies ahead. Economic risk will follow and be reflected on bond and equity markets.
France’s strategic position brings its political impasse to the EU as well. That matters because it coincides with Germany’s political uncertainties and economic threats over coming months. A new federal government will need time to bed down, a task made more challenging because of the pressing decisions needed at national and European levels. A potential trade war with China led by Donald Trump’s new US administration would hugely complicate German and EU efforts to protect European interests. These have been well articulated in several recent major reports on EU economic renewal.
This conglomeration of multiple and inter-related challenges threatens a crisis at the heart of the EU, with implications for all member states, including Ireland. And the coincidence of political tremors in the two traditional major EU players is worrying. Vision and leadership to find a way forward are in short supply. EU structures could help, though finding coherence across the Union on the big issues will be far from easy.
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Publish date : 2024-12-05 12:45:00
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