France’s government was ousted on Monday after lawmakers overwhelmingly rejected Prime Minister Francois Bayrou’s efforts to rein in soaring national debt. The no-confidence vote, which passed by 364 to 194, exposes deep divisions in parliament and throws the eurozone’s second-largest economy into further political upheaval.
President Emmanuel Macron now faces the daunting task of appointing his fifth prime minister in less than two years. The Élysée said a new head of government will be picked in the coming days. Yet whoever takes charge will inherit the same challenge that felled Bayrou: passing a budget through a splintered National Assembly.
Bayrou’s resignation, set for Tuesday, comes after his failed attempt to win parliamentary backing for a deficit-reduction plan. France’s budget deficit has reached nearly double the EU’s 3% threshold and the country’s debt stands at a staggering 114% of GDP.
The outgoing prime minister had proposed EUR 44 billion in budget savings, but opposition parties—mindful of the 2027 presidential race—refused to support his agenda.
There is power to topple governments but not to change economic realities, Bayrou warned deputies before the vote. Costs will keep rising, and the debt load will only grow heavier and more expensive, he continued.
The government’s fall has emboldened both the far right and hard left. Marine Le Pen called for an immediate election, while Jean-Luc Melenchon of France Unbowed demanded Macron’s own resignation. The president has resisted dissolving parliament, for now, but faces unprecedented strain with his influence waning domestically and in Europe.
Investors had braced for this outcome, limiting immediate market reaction. However, volatility may rise with Fitch Ratings set to review France’s sovereign rating on Friday. A downgrade—especially with more reviews from Moody’s and S&P Global looming—could increase borrowing costs and amplify fiscal pressures.
France already runs the highest deficit-to-GDP ratio in the euro area and pays a widening premium on its sovereign debt compared to Germany. Any potential rating cut may further complicate the nation’s ability to service its debt affordably.
Meanwhile, social tensions are brewing. A grassroots movement, “Bloquons Tout” (Let’s Block Everything), is organizing protests this week, and union strikes are planned soon after. The Socialists have floated a counter-budget introducing a wealth tax on fortunes over EUR 100 million, aiming for EUR 22 billion in savings—a proposal at odds with Macron’s pro-market reforms.
