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A collapse of the government could further unnerve financial markets since it would put a quick passage of the budget at risk.
Prime Minister Michel Barnier of France pushed a budget bill through the lower house of Parliament without a vote on Monday — a risky move that sets the stage for a likely no-confidence motion this week that could topple the government.
The prospect of a government collapse — and of a failure to pass a budget — has rattled financial markets, sharply increased France’s borrowing costs, and further deepened the uncertainty that has gripped the country since snap elections last summer yielded no clear parliamentary majority.
The fate of Mr. Barnier and of his cabinet, both appointed by President Emmanuel Macron just three months ago, now rests almost entirely in the hands of Marine Le Pen’s far-right National Rally party.
Mr. Macron, whose term runs until the spring of 2027, will remain as president even if Mr. Barnier and his cabinet fall. But Mr. Macron will need to appoint a new prime minister.
Ms. Le Pen and Mr. Barnier, a veteran center-right politician, have engaged in a game of chicken over the past week. Ms. Le Pen dangled the threat of a no-confidence motion ever more vocally if Mr. Barnier did not accede to her demands on the budget. Mr. Barnier warned of “serious turbulence on the financial markets” and the troubles ahead if the country reaches the new year without a budget — warnings that Ms. Le Pen has dismissed as fear-mongering and “fake news.”
Mr. Barnier made some concessions, announcing that he was scrapping a hike in electricity taxes and reducing health care coverage for undocumented people. But Ms. Le Pen indicated those changes were not enough to sway her lawmakers from joining those on the left who oppose Mr. Barnier’s leadership in voting to topple the government.