Macron Names a New French Government as Budget Battle Looms #FrenchFinance

Article content

(Bloomberg) — French President Emmanuel Macron appointed Antoine Armand as finance minister, thrusting a 33-year-old with limited political experience into an urgent budget battle in which he must maintain tacit support from the far right to avoid government collapse.

He will be flanked by Budget Minister Laurent Saint-Martin, according to a statement read out by the president’s chief of staff on Saturday. The 39-year-old head of Business France, which promotes export growth and foreign investment, is a former general rapporteur for the budget in parliament.

Article content

The priority for Prime Minister Michel Barnier’s administration will be to present a budget bill for next year in the coming weeks and tackle France’s massive deficit. Yet the task is complicated as Macron’s surprise June decision to call a snap legislative vote after defeat by Marine Le Pen’s far-right party in European elections left a deeply divided National Assembly with no group close to a majority.

In an indication of the tensions between political parties, Macron took two months before choosing a new premier outside his centrist group, while Barnier, of the conservative Republicans, needed more than two weeks of intensive consultations to come up with a list of ministers.

Armand, whose title includes finance, the economy and industry, is a central piece in the political puzzle that also saw Republicans Senate leader Bruno Retailleau appointed as interior minister. Overall, there was a shift to the right in the cabinet: out of 39 members, 10 come from Barnier’s group, despite it holding fewer than 50 of 577 seats in the National Assembly, and 12 from Macron’s.

Article content

Article content

Getting the balance right is crucial for the survival of the administration, which could easily be toppled by a no-confidence vote in the lower house. Parliamentary math means Le Pen, whose National Rally won the most seats of any party, can influence whether such a motion brought by left-wing parties succeeds.

Barnier on Saturday posted on social media platform X that the team will get “to work.” But initial reactions on both ends of the political spectrum were less than encouraging for the prime minister.

“This new government marks the return of Macronism by the back door,” National Rally President Jordan Bardella wrote on X, adding that it’s “a government which has no future.”

Far-left leader Jean-Luc Melenchon, whose France Unbowed party is part of the leftist New Popular Front alliance that is the biggest group in parliament, wrote on X that “it’s necessary to get rid” of the administration as soon as possible. Melenchon could try to call a no-confidence vote as soon as Oct. 1.

The cabinet is most notable for just how few high-profile politicians agreed to be members. Laurent Wauquiez, the leader of the Republicans in the National Assembly, turned down the finance minister position in a meeting with Barnier on Thursday, according to French media reports. Following the meeting, Wauquiez nevertheless posted on X that Barnier could count on his support and that of the Republicans in parliament.

Article content

The announcement brings an end to weeks of uncertainty after the decision to call snap elections triggered turmoil in bond markets, driving up France’s borrowing costs compared with other European countries as investors fretted about the impact on public finances. The fiscal situation has deteriorated further over the summer under the watch of a caretaker government.

Without new measures to curb spending or increase tax, France’s budget deficit could reach 6% of economic output this year, Les Echos reported on Friday, citing new forecasts from the Finance Ministry. European Union rules cap it at 3%.

Beyond the immediate fiscal concerns, Macron’s legacy is in play. Over more than seven years in office, he stuck to a pro-business mantra, refusing to increase taxation, pouring investment into new industries and relying on the promise of improved growth to plug holes in public finances. But with a persistently sluggish economy and rising debt, a change of tack has become inevitable.

Macron Supporter

Armand supported Macron’s 2017 election campaign and went on to run a local branch of the president’s party in the Haute-Savoie region bordering Switzerland, before winning a seat in the 2022 legislative elections.

Article content

Like Macron, Armand is a graduate of the prestigious Ecole Nationale d’Administration. He began his career at the Finance Ministry, working on industry, the management of the Covid crisis and the energy transition.

Armand regained his seat in parliament in the snap elections, and in July was elected to chair of the National Assembly’s economy commission, a post he will leave after being appointed minister.

On his website, Armand says he rejects politics that is focused on party labels rather than getting results.

“I’ve alway been passionate about politics — in the noble meaning of the word,” Armand wrote.

Saint-Martin will report directly to Barnier, a sign of the importance the prime minister attaches to pushing through a budget.

According to French law, the government must present a budget to parliament by the first Tuesday in October, although aides to Barnier have floated the possibility of delaying that by a week. Compounding the pressure on the new finance minister, the European Union has put France in a special procedure to enforce stricter fiscal discipline in countries deemed to have excessive debts and deficits.

Barnier has indicated that containing the deficit will be a top priority. But the veteran conservative politician has given little indication of how he aims to go about it and is far from having a majority in parliament to back any plan.

—With assistance from Alan Katz.

Article content