Prime season: France's government crisis will damage the economy and affect aid to Ukraine

A jab from the right

During the budget debate, Marine Le Pen leveraged her power over the Barnier government and frequently invoked “red lines.” Her National Rally opposed delaying the indexation of pensions, protested the government's intention to reduce the reimbursement rates for some medicines and healthcare services, and was generally unhappy with the proposal to preserve social contribution exemptions for employers. The National Rally's “counter-budget” instead suggested making cuts in spending on immigrant services and reducing France's contributions to the EU. Le Pen's supporters, however, did not emphasize these points in the “red lines” debate.

Some of Le Pen's “red lines,” such as the demand not to raise the electricity tax, concerned the state budget directly, and the government's response to them played a role in the National Rally's vote regarding confidence in the cabinet. For this reason, Barnier was forced to heed the demands of the far-right — and even admitted in government press releases to doing so.

In the end, pension indexation became the stumbling block in Barnier's bargaining with Le Pen. The extreme right were not satisfied with the proposed compromise to index pensions by 0.8% (half of the inflation rate) early in 2025 and by another 0.8% six months later for pensioners whose income is below the minimum wage. Le Pen's struggle over this item is a nod to older voters, who have been increasingly supportive of the far right in recent years.

During the budget discussions, it became clear that it would be nearly impossible to get a solid deal with Le Pen’s forces. Barnier's entourage complained that after each concession, the National Rally leader simply made more demands. Meanwhile, the left, which already disliked Barnier, became increasingly frustrated by the fact that the government was negotiating only with the extreme right.

The Le Pen trap

Barnier's last attempt to get out of Le Pen's trap and pass a “social” budget bill was to invoke Article 49.3 of the Constitution. The government realized that their fate depended on Le Pen's decision — a political reality that she never passed up the chance to remind them about. But the prime minister still hoped she “wouldn't dare” help to vote him out.