France’s government has fallen.

A historic no-confidence vote in the government has forced out Prime Minister Michel Barnier and his Cabinet.

The National Assembly approved the motion by 331 votes. A minimum of 288 were needed.

A conservative appointed in September, Barnier becomes the shortest-serving prime minister in France’s modern Republic.

“I can tell you that it will remain an honour for me to have served France and the French with dignity,” Barnier said in his final speech before the vote.

“This no-confidence motion… will make everything more serious and more difficult. That’s what I’m sure of,” he said.

But what happens next?

Let’s take a closer look:

The situation in France

More from Explainers

How ChatGPT is becoming everyone’s BFF and why that’s dangerous This Week in Explainers: How recovering from Gen-Z protests is a Himalayan task for Nepal

First, let’s examine the situation in France.

Wednesday’s crucial vote rose from fierce opposition to Barnier’s proposed budget.

The National Assembly, France’s lower house of parliament, is deeply fractured, with no single party holding a majority.

It comprises three major blocs – Prime Minister Emmanul Macron’s centrist allies, the left-wing coalition New Popular Front, and the far-right National Rally.

Both opposition blocs, typically at odds, are uniting against Barnier, accusing him of imposing austerity measures and failing to address citizens’ needs.

As per Euro News, Barnier used Article 49.3 of France’s Constitution to pass the 2025 social security budget plan sans a parliamentary vote.

Editor’s Picks

1

Why Michel Barnier was ousted as French prime minister just after 91 days 2

Notre-Dame de Paris rises from the ashes: How France's cultural icon was rebuilt

This is the first government in six decades to be toppled by a no-confidence vote.

Caretaker govt takes over

Barnier’s government will likely stay on in a caretaker capacity to handle day-to-day business while Macron tries to chart a path out of the mess.

As per Euro News, this is exactly what happened earlier this year after Macron dissolved the National Assembly after his party lost in the EU polls.

If parliament has not passed a budget by December 20, the government can propose emergency legislation that would roll over spending limits and tax provisions from 2024, pending the installation of a new government and a new 2025 budget bill.

The $63 billion of savings through spending cuts and tax rises planned by the Barnier government - and welcomed by investors and ratings agencies - would then fall by the wayside.

However, that would be highly risky, jurists say, as it is unclear whether a caretaker government can use such powers. Doing so would inevitably trigger political turmoil.

Le Pen's party has said households would be better off in this scenario, something Barnier’s government denies. It says more people will end up paying tax or additional tax if thresholds cannot be adjusted for inflation.

Macron to pick prime minister

Macron must now appoint a new prime minister.

However, there is no deadline that Macron must adhere to, as per Euro News.

The trouble for him is that the fragmented parliament remains unchanged.

No new legislative elections can be held until at least July, creating a potential stalemate for policymakers.

As per The Conversation, Macron could try to do so by trying to reel in MPs from the traditional, conservative right and centre left.

He could do this by offering to appoint one of them as prime minister.

However, the left-leaning MPs are unlikely to support him.

A new left-leaning majority government could also take charge with the New Popular Front luring in MPs from the Centre.

Macron could also re-appoint Barnier but with the condition that he change the budget bill to appease the opposition and avoid another no-confidence vote.

Last time Macron needed to pick a prime minister, it took him around two months.

“If this time, the President wants to prevent another government collapse, he’ll have to allow MPs to come up with a more consensual figure,” François-Xavier Millet, a political scientist and professor of Public Law at the University of the French West Indies, told Euro News.

Emmanuel Rivière, an expert in public opinion and political advisor, thinks otherwise.

“We need a project and an agreement, not a personality. It’s not up to Macron to do the casting. An agreement is needed to get through the budgetary hurdle. It could be a pure technocrat with a specific mission to make sure France has a budget for 2025,” Rivière told the outlet.

Macron’s surest path to naming a new prime minister able to form a government and pass a budget before the end of the year is to acquiesce to the budget demands of Marine Le Pen’s National Rally.

But this would imply abandoning efforts to haul down France’s gaping budget deficit from a projected 6.1 per cent this year to nearer 5 per cent in 2025.

Macron will address the French on Thursday evening, his office said, without providing details.

Barnier is expected to formally resign by then.

What about Macron?

The tumult that has followed Macron’s decision to call a snap election has diminished his standing at home and abroad.

Under the constitution, Macron’s term in office runs until the spring of 2027.

Opponents on the hard left and far right have demanded he resign to take responsibility for the political mess.

As he lacks a majority in parliament, Macron’s opponents could shoot down one pick for prime minister after another.

Le Pen says a government reshuffle stands little chance of long-term success, while a dissolution of parliament is constitutionally not possible before July, leaving only one option: Macron steps down.

But this is unlikely

“A resignation is possible but the timing isn’t right. It would only add to the chaos and confusion, and wouldn’t change anything when it comes to how fragmented the National Assembly is,” Millet told Euro News.

Alternatively, the constitution gives extensive powers to the president in crisis situations.

Macron can call referendums and has the admittedly extreme possibility of invoking emergency “full powers” under Article 16, drafted by the founders of the Fifth Republic with wartime in mind.

The president has responded to demands to resign by pledging to fulfil his role “with all my energy, to the last second.”

Macron said discussions about him potentially resigning were “make-believe politics” during a trip to Saudi Arabia earlier this week, according to French media reports.

“I’m here because I’ve been elected twice by the French people,” Macron said. He was also reported as saying: “We must not scare people with such things. We have a strong economy.”

Instability could spook investors

While France is not at risk of a US-style government shutdown, political instability could spook financial markets.

France is under pressure from the European Union to reduce its colossal debt. The country’s deficit is estimated to reach 6 per cent of gross domestic product this year and analysts say it could rise to 7 per cent next year without drastic adjustments. The political instability could push up French interest rates, digging the debt even further.

Carsten Brzeski, global chief of macro at ING Bank, said uncertainty over France’s future government and finances is deterring investment and growth. “The impact of France not having a government would clearly be negative for the growth of France and hence the Eurozone,” Brzeski said.

France has seen bond market borrowing costs rise, bringing back ugly memories of the Greek debt crisis and default in 2010-2012.

Analysts say France is far from a similar crisis because much of its outstanding debt does not come due for years, and because its bonds remain in demand due to a shortage of German government bonds. Additionally, the European Central Bank could intervene to lower French borrowing costs in case of extreme market turmoil, though the bar for that remains high.

With inputs from agencies