BRUSSELS, BELGIUM – MARCH 05: European Union Chief Brexit negotiator Michel Barnier speaks during a conference after the first round of UK-EU negotiations in Brussels, Belgium on March 05, 2020.
Anadolu Agency
French President Emmanuel Macron has named Michel Barnier, the European Union’s former Brexit negotiator, as prime minister in a bid to end a political stalemate that has mired the nation since early July.
Macron charged Barnier with forming a government on Thursday, according to an announcement shared by the Elysee Palace.
The 73-year-old conservative must now face a no-confidence vote in the lower house of parliament before assuming governance.
The announcement hopes to end a weeks-long political standoff and resolve a hung parliament that emerged after the surprise victory of the five-party left-wing New Popular Front coalition in the run-off vote of July 7. Macron’s centrist “Together” bloc came in second in the election, with the far-right Rassemblement National coming in third.
None of the factions achieved the 289 seats needed to clinch an absolute majority, plunging France into the stewardship of a caretaker government during the highly-mediatized summer stretch when the nation hosted the heavily attended Olympics Games.
Macron accepted the resignation of former Prime Minister Gabriel Attal on July 16, following the electoral results.
Barnier is no stranger to domestic French leadership and has previously served in four cabinet positions, including as minister of the environment, minister of state for European Affairs, minister of foreign affairs and minister of agriculture and fisheries. He received two appointments in the European Commission and acted as the bloc’s chief negotiator in protracted talks to shape the terms of Britain’s exit from the European Union.
Rassemblement National on Thursday indicated that it would consider Barnier as a possible prime minister on his merits.
“We will judge, based on the facts, his general political discourse, his budgetary deliberations and his actions,” the party’s leader Jordan Bardella said in a CNBC-translated post on the X social media platform. “We will plead that the great emergencies of the French people, the purchasing power, security, immigration are finally addressed, and we reserve the right to every political means if that is not the case over the next few weeks.”
Marine le Pen, a key high-profile figure of Rassemblement National, meanwhile said that the party will not participate in a government led by Barnier, according to a CNBC translation of a post on X.
“We are now in the situation that we announced, one of chaos. We will see whether Michel Barnier manages, at least, to make sure that the budget can be balanced,” she added.
Left-wing firebrand Jean-Luc Mélenchon — the self-appointed figurehead of the New Popular front, who previously asked for the left to receive the premiership — has meanwhile criticized the nomination, describing Barnier as “a member, among other things, of a party that came in last during the previous legislative election,” according to a CNBC-translated update on X.
“We find ourselves with a Prime Minister appointed with the permission of the RN,” he added, with reference to Rassemblement National.
Market reaction
French stocks moved slightly higher following the announcement, but remained 0.4% lower on the previous session. The nation’s CAC 40 index has suffered a volatile year, tumbling through much of June but ending up with a slight gain for July after an outright victory for the far-left or far-right did not manifest.
French borrowing costs spiked over those of Germany’s during the summer election campaign amid fears that populist policies would increase the country’s debt load.
French bond yields have since cooled, but the country’s hefty budget deficit and high debt-to-GDP ratio remain on the minds of investors given the potential for ongoing political paralysis in the divided National Assembly.
While the country has seen some respite from inflation, which has cooled to 1.9%, the country has recorded sluggish economic growth this year. Beyond longer-term doubts over whether it can meet European Union-mandated fiscal mandates, there are questions over whether the hung parliament will be able to approve the 2025 budget before the end of the year. Even in 2022, Macron resorted to using a special constitutional power to pass the following year’s spending bill.
French bonds remained little-changed Thursday afternoon. French banks Societe Generale and BNP Paribas, which also took a beating over the summer on suggestions of interventionist economic policies and stronger regulation, were 3.17% and 2.6% higher respectively at 1 p.m. in London.
— CNBC’s Charlotte Reed contributed to this report.
