Macron’s new prime minister Bayrou faces a budget battle with a restive French parliament

Gabriel Stargardter and Makini Brice

PARIS (Reuters) – New French Prime Minister Francois Bairro said on Friday he faced a “Himalaya” of challenges to tackle France’s deficit, and the tepid reaction from opponents to his appointment underscored the difficulty of the job he faces.

President Emmanuel Macron earlier named Bayrou as his fourth prime minister in 2024, tasking his centrist ally with leading France out of its second political crisis in six months. He replaces Michel Barnier, who was ousted by MPs last week for trying to pass a 2025 austerity budget.

Bairro, a three-time presidential candidate who has long warned about French fiscal profligacy, was succeeded by the same fractious parliament that toppled Barnier. His proximity to the deeply unpopular Macron may also hurt him.

Speaking alongside Barnier on Friday, Bairro acknowledged the challenge.

“No one knows the gravity of the situation better than me… I am not aware of the Himalayas that stand before us,” he said. “I believe that this issue, the deficit and the debt, is a moral issue, not just a financial one.”

Efforts to contain the deficit, which is expected to end the year at more than 6% of gross domestic product, lie at the heart of France’s political weakness.

The festering crisis has cast doubt on whether Macron will complete his second term in office until 2027, lifted borrowing costs in France and left a power vacuum in the heart of Europe, just as Donald Trump prepares to return to the White House.

Bajru’s immediate priority will be passing a separate bill to extend the 2024 budget, with the toughest battle over the 2025 bill looming early next year.

Bajrou told reporters he wanted to move quickly, but France’s sharp political divisions mean even the basic task of appointing his cabinet could be delayed.

The Socialists, angry that the president ignored their demands for a leftist prime minister in favor of a “Macronist,” said they would not join Bayru’s coalition, and could even seek to oust him if he tries to push through the budget.

Pro-Banier’s center-right said it would wait to see Bairu’s proposals before deciding whether to join him, Laurent Vauquiez, head of the Republican Right group in the National Assembly, wrote on X.

Leaders of the far-left France Unconquered party said they would immediately seek Bayrou’s ouster, while the heads of the far-right National Assembly (RN) party said they were willing to give him the benefit of the doubt for now.

IMPOSSIBLE JOB?

Bajru, founder of the Democratic Movement (MoDem) party, which has been part of Macron’s ruling coalition since 2017, was the long-time mayor of the southwestern city of Pau. His rustic roots are a key component of his political character.

The mixed reaction to Bayrou’s appointment suggests he is likely to live day-to-day, at the mercy of Macron’s opponents, for the foreseeable future. Barnier’s three-month premiership was the shortest in modern French history.

Macron will hope Bayrou can delay the no-confidence vote until at least July, when France can hold new parliamentary elections. But getting there won’t be easy.

An early test will come with the 2025 budget negotiations, which are expected to begin in January.

Barnier’s bill, which aimed to save 60 billion euros ($63 billion) to appease investors increasingly worried about France’s deficit, was seen by the far right and left as too stingy. The government’s failure to find a way out of the impasse has pushed up borrowing costs in France.

KSTB research director Kathleen Brooks said Bairou’s appointment was unlikely to have much of an impact on French bonds. However, she said the French stock index was underperforming German stocks by three decades.

“With France still mired in political turmoil, closing this gap is an uphill battle, even with a new prime minister,” she wrote.

Macron appointed Bajrou as justice minister in 2017, but he resigned just weeks later amid an investigation into alleged fraudulent hiring of parliamentary aides by his party. He was acquitted of fraud charges this year.

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