Macron Seeks Last-Ditch Talks to Salvage France Government

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00:00France's equity benchmark, it's trailed a European and U.S. peer since President Macron called that snap election.

00:06It was a little over a year ago, let's say a year and a half ago, June of 2024.

00:09Worries about political turmoil taking hold again this August.

00:13Investors have had their concerns. Is this what they've been fearing?

00:19The short answer is not yet.

00:21And believe it or not, even though we're what's into feels like the sixth season finale of France this year,

00:27we're still not at a point where this is a fiscal crisis.

00:30It's still the same kind of political stalemate.

00:33And actually, the latest development that Emmanuel Macron is giving the same man,

00:37Sébastien Lecornu, another 48 hours to try and come up with a sufficient coalition to be able to pass a budget,

00:44because that's what this is all about, tells us that we're not at the end of this season just yet.

00:50So essentially, we're into another round of negotiations led by the same man speaking to the same people

00:56hoping for a different result.

00:59What happened this morning is that those talks had fallen apart,

01:02and Sébastien Lecornu became the shortest-lived prime minister in modern French history,

01:07just 27 days on the job.

01:09And actually, the ministers that were appointed last night became the shortest-serving ministers as well.

01:14Most of them were only in the job for just over 12 hours before they had resigned, effectively,

01:19because the government had fallen.

01:22So we're back into a sort of holding pattern for 48 hours.

01:25We know already that there are meetings planned for the Élysée Palace tomorrow morning

01:29with those parties who have been loosely dealing with Emmanuel Macron's party in France as well.

01:35The hope is that they will be able to do better this time round.

01:38There's been some caste changes in the Cabinet that might help that process along.

01:43But where we'll end up by Wednesday evening is now the key question.

01:47Emmanuel Macron, and bear in mind we are deep in the annals of political spin here as well,

01:53has talked about taking responsibility if the parties can't agree by Wednesday evening.

01:58Now, what that means could be really anything that you can imagine.

02:02The options he has opened to him is finding someone new for the job,

02:05so getting rid of Sébastien Lecornu for a second time,

02:08calling an election to the National Assembly,

02:11although polls indicate he probably wouldn't end up with a result that was that different,

02:14or even, in extremis, resigning himself,

02:18although that very much looks off the table for the moment.

02:20Well, it makes you wonder if President Macron's request of his outgoing prime minister

02:24is kind of a little insanity, right, asking him to kind of do the same thing over again

02:29and expecting different results.

02:31What's really, you know, going on in France?

02:33Why is, you know, what are the difficulties politically that this nation is trying to figure

02:42as it moves to its next chapter, if you will?

02:47So, look, since June of last year when Emmanuel Macron called snap elections to the National Parliament,

02:52we've ended up with a parliament essentially that has three main blocks.

02:56None of them can govern by themselves, and they can't agree between each other to govern either.

03:00So what's been happening since then is that Emmanuel Macron's centrist group,

03:04along with the centre-right party, have been sort of getting some measures passed

03:08by getting other parties to abstain, particularly the centre-left Socialist Party.

03:13What the hope of this prime minister had been would be to bring on board the likes of that Socialist Party,

03:18perhaps convince them to abstain on key votes, to allow them to get some sort of budget through.

03:23But actually the socialists have been pretty intransident in the past month,

03:26and that's really what's changed in the past month, is that they have insisted

03:30they want their budget plans, which involve austerity at a different pace

03:35to what's being proposed by the current government,

03:37but also things like a wealth tax proposed by the economist Gabriel Zuckman.

03:41Essentially nobody in the centre or the centre-right wants those things.

03:44Nobody can agree.

03:46The question is, within 48 hours, can they come up with what the Elyse Palace is calling

03:51a platform of stability to try and keep the, essentially, country ticking over,

03:56and some sort of budget agreed, before they start hitting a whole bunch of constitutional

04:01illegal deadlines for getting that plan outlined.

04:03Right, sometimes a second chance, and as we all in journalism know,

04:06deadlines can make things happen.

04:08We all live it every day.

04:09Hey Stephen, last question, and I think it was something we were kicking around here.

04:13You've got a president, Emmanuel Macron, you have now an outgoing prime minister.

04:18I mean, who really has the power in France, and what do we need to understand here

04:22on the other side of the pond in terms of these two positions,

04:27and how significant is it when a prime minister leaves?

04:32Look, the prime minister has historically in France been this pressure release valve

04:37that presidents have gotten rid of them when they want to reset their agendas.

04:41So we're not used to them being long-standing public figures that would last

04:44a whole five years in the way of a presidential term.

04:48But what's been happening in the past two years is sort of the extreme opposite of that,

04:52where prime ministers can't seem to get anything done

04:55because of the fractured nature of the parliament.

04:58So the power still very much lies with Emmanuel Macron.

05:00He is the man that can make one of the three decisions that he has in front of him.

05:06You can sort of imagine that he dissolved the parliament the last time.

05:09That didn't work so well, so he doesn't want to go down that route again.

05:11And he's hoping he can find somebody who can do a deal in the meantime

05:14so that he doesn't have to think about the more extreme options like him resigning early.

05:19His term still runs till 2027.

05:21So he still has that hold on power, at least for now.

05:25But when you look at what's happening to French borrowing costs,

05:27you wonder as well how much influence the bond markets are going to be having

05:30on these decisions as well.

05:32As time gets tighter for a budget to be passed,

05:35we know investors are already pretty jittery.

05:37They got a shock today.

05:39How long more will they be patient with France?

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