France’s Political Crisis Worsens as Government Topples

PARIS – France, the eurozone’s second-largest economy, faces fresh political upheaval and deepening financial trouble after Prime Minister François Bayrou’s government fell on Monday, 8 September. A no-confidence vote in the National Assembly saw 364 MPs reject Bayrou’s minority administration, with only 194 in support, ending his nine-month tenure.

This is the second government collapse within a year, leaving President Emmanuel Macron scrambling to name a fifth prime minister in less than two years. The ongoing turmoil has raised questions about France’s soaring national debt, spooked investors, and stirred fears that the International Monetary Fund may step in.

François Bayrou, a 74-year-old political veteran chosen by Macron in December 2024, triggered the confidence vote in a last-ditch effort to rally support for a €44 billion austerity package intended to shrink the growing deficit. The plan proposed cutting two public holidays and freezing welfare payments. These moves instantly drew criticism from across the political spectrum.

All the main opposition parties, spanning far-right National Rally, hard-left France Unbowed, and the Socialists, rejected the budget as unfair to the poorest. Even within Bayrou’s own alliance, with parts of Les Républicains, support crumbled, sealing his government’s defeat in what many analysts called a political disaster.

In his parting speech to parliament, Bayrou warned of a debt situation he called “life-threatening,” describing it as a “silent, invisible, and unbearable leak.”

He argued that inaction would put France’s independence at risk, equating unchecked borrowing with losing control to foreign lenders. “You can defeat the government, but you can’t remove the facts,” he told MPs. His appeal went unanswered, and his departure leaves France in a fragile state at a key moment.

Macron Faces an Unravelling Situation

Bayrou’s ousting has placed Emmanuel Macron in an ever more difficult spot. A gamble to dissolve parliament in June 2024 failed, fragmenting the legislature into three competing blocs, none with a majority.

The government has not functioned smoothly since, with Macron burning through prime ministers at record speed, from Gabriel Attal to Michel Barnier, Bayrou, and now a yet-to-be-named successor. The Élysée Palace stated a new appointment is expected soon, but experts predict continued resistance for whoever takes the job.

Macron’s popularity has slumped to new lows. Once seen as a reformer, he now faces criticism for favouring the wealthy, due to tax cuts for companies and the richest households. Since he took office, government tax receipts have fallen from 54% to 51% of GDP.

His 2023 decision to push through a higher retirement age without a full parliamentary vote caused mass protests. Approval ratings are now around 20%—the worst since his election. Opposition figures like Jean-Luc Mélenchon are calling for Macron to resign, while Marine Le Pen’s National Rally, bolstered by mounting public anger, is demanding new elections.

France’s Deepening Economic Trouble

Behind the political drama is a severe financial crisis. France’s national debt now totals €3.346 trillion, about 114% of its GDP, the third highest in the eurozone after Greece and Italy. The deficit stands at 5.8% of GDP, almost double the EU’s 3% rule. About 7% of government spending now goes solely to paying interest.

Growth for 2025 is estimated at just 0.8%, held back by political uncertainty and ongoing global shocks like the pandemic’s after-effects and the energy crisis since Russia invaded Ukraine. Heavy spending in recent years, including €240 billion in emergency measures, has strained government coffers.

Bayrou’s budget tried to cut the deficit to 4.6% by 2026 and reach 3% by 2029, but its rejection has fuelled fears of a fiscal cliff. Finance Minister Eric Lombard warned last month that if the debt remains unchecked, seeking help from the IMF could become unavoidable. Even as he later played down this scenario, markets remain unsettled.

France still has access to financial markets for loans, but investor nerves are visible. The yield on 10-year French government bonds has climbed past 3.5%, now higher than Spain, Portugal, or even Greece, and is nearing Italy’s rates.

Major banks, including BNP Paribas, Crédit Agricole, and Société Générale, lost 8-10% in share value last week as investors worried about their exposure to government debt and the risk of credit downgrades from agencies such as Fitch, Moody’s, and S&P Global.

Financial Charts in France Edge as Bailout Talk Grows

Confidence among investors is fading fast. The lack of a new 2025 budget and the political stalemate have fuelled talk of a paralysis that could drag on. Nomura analysts warn that a missed budget might push the deficit higher in 2026, undermining France’s credit standing further.

The European Central Bank might have to intervene before the IMF, but any outside rescue would be seen as a humiliation for France. Political strategist Hugo Drochon noted that what investors want most is action—any move to end the standoff.

Credit downgrades from ratings agencies, possibly as soon as Friday, threaten to lift borrowing costs and make the crisis even worse over financial charts in France.

Macron now has to decide whether to try another prime minister from the political centre, risking more stalemate, or call early elections. If elections are held, Marine Le Pen’s National Rally, which currently tops the polls with 33% support, could benefit.

Some left-wing MPs suggest a Socialist-led government with higher taxes for the wealthy as an alternative, though any new administration would face steep opposition in the split Assembly. Public discontent is rising, with groups like “Bloquons Tout” and planned trade union strikes showing that anger is not confined to politicians.

The next few weeks will be crucial for financial charts in France. Macron must find a way to steady politics, rebuild investor trust, and deal with a growing debt that now threatens broader eurozone stability. Until then, France remains without a stable government, while warnings about the harsh reality of debt continue to loom over its future.