A house divided

Following the success of Le Pen’s National Rally in the European Elections in June 2024, Macron took perhaps the greatest political gamble of his career and dissolved parliament calling fresh elections. The result, the decimation of his Ensemble party and the collapse of centrist dominance in general. The paralysis that has gripped French politics since seems insurmountable. The 182 seats won by the left-wing New Popular Front is the lowest share for  the largest party since 1978  and no combination of cross-party alliance has so far been successful in forming a majority faction (289 seats). 

The roughly even split of the French Parliament across three adversarial ideological blocs has proven increasingly challenging for Macron to navigate. His first Prime Minister, Brexit veteran Michel Barnier  became the first since 1962 to be ousted in a vote of no confidence  after proposing a new budget aimed at reducing the French deficit by £49 billion. Attempts to cut France’s deficit would similarly end the premiership of Bayrou  while Lecornu's appointment, resignation, and re-appointment speaks to the lack of options facing Macron in finding someone capable of passing a budget, the most basic function of any government. 

Before re-appointing Lecornu, Macron met with  leaders of the French Parliament - except those on far-right and left. Neither Le Pen protogé, Jordan Bardella, nor far-left leader Jean-Luc Mélenchon were invited as Macron refuses to engage with more radical political elements. With the left wanting investment, the far right wanting cuts, and both utterly despising the centre, how can France  achieve something no French government has achieved since 1974 - balancing the books. 

Deficit and debt 

Like many other countries, COVID-19  ballooned France’s debt - now standing at 114% of GDP, the third largest in the Eurozone. High levels of debt have been a common feature among EU nations since 2008, but this is the first time such a crisis has its epicentre from within the ‘Franco-German engine’ that powers the European Union. This, coupled with the political stasis is impacting market confidence that France is good for it, with ripple effects for the rest of the Eurozone.

Bond markets are - at their crudest - a representation of the financial markets' confidence in a country’s economy. This failure to form a government and decide a budget is eroding market investors' confidence in France’s ability to  cut the deficit. France risks entering a doom loop of falling confidence and ever mounting debt costs, something that threatens contagion for the rest of Europe. 

Source: Eurostat & House of Commons Library 

Cast your mind back to the Greek Debt Crisis. Greece’s subsequent bailout sent political and economic shockwaves through the EU.  At that time, Greek GDP stood at around $300bn - France’s is around $3.2 trillion. If France were to enter a Greece-like crisis, the economic fallout across Europe  would be dire. Following news of Lecornu’s initial resignation the bond markets spiked and value of the Euro fell. The head of the French central bank, Francois Villeroy,  warned that the ongoing political instability in the country was costing at least 0.2% in GDP growth and that the damage could worsen. “The whole of Europe is watching us” said Villeroy.

Stick or twist

Confidence in Macron’s ability to continue as president is all but gone - he is approaching near-Trussian levels of unpopularity. His staunchest supporters are now openly calling for him to become the first president since Charles de Gualle to resign. Gabriel Attal - a former Prime Minister and heir to Macronism - stated that he “no longer understand(s) the decisions of the President of the Republic”. So will Macron go? Those who know the President best indicate that this is unlikely. But if he will go is a different question to if he should. 

The case for the prosecution: Fairly or unfairly, Macron has himself become a barrier to cooperation. Loathed on both the left and right, there is no incentive for either to make his life easier. A new president may face the same problem, they may not, all we know for sure is that for Macron, paralysis will continue. Then there’s Le Pen. An early resignation would effectively kill her presidential ambitions as she is currently banned from seeking election to public office after being found guilty of defrauding the European Parliament in April. By exiting before her appeal in 2026, Macron would ensure that Le Pen does not get the keys to the Élysée.

The case for the defence: Were Macron to resign now, polls indicate that Bardella would be the firm favourite in any presidential election. Despite breaking from Le Pen last year , Bardella remains a deeply problematic and divisive figure. An ardent critic of Islam and immigration, Bardella has pledged to remove France’s birthright citizenship. To break the deadlock, any new President would still need to dissolve parliament which could deliver a similar three way stasis or could even serve up a  far right majority. National Rally currently enjoys a ten point lead over the New Popular Front and Bardella’s party would further benefit from the unlikelihood of New Popular Front and Ensemble repeating the level of cooperation seen in 2024. 

Macron faces an unenviable set of choices. Stay and risk exacerbating France’s economic crisis and strengthening the far right ahead of 2027. The long term damage of a full blown sovereign debt crisis would reap havoc for a generation or more and further embolden the far-right - not just in France but across Europe. Or he could resign, potentially handing Bardella the presidency and the National Rally control of the legislature, but consigning Le Pen to the political wilderness in the face of Bardella’s increasing modernisation of the National Rally. By forcing the issue, Macron may hope that the National Rally tears itself apart. Whatever happens, Europe and the world is watching.