00:00We can now bring in Andrew Smith, a lecturer and French historian at Queen Mary University of London.
00:07Thank you so much for joining the program today, Andrew.
00:14Now, as we heard, Le Corneau had promised he wouldn't do this.
00:19He wouldn't invoke this article.
00:21And he conceded that he regretted having to do it.
00:25So why is the French government using Article 49.3 to pass the budget at this point?
00:31And what sort of political risks is this going to create for Le Corneau and the government?
00:39Well, I think there were 350 plus reasons for using this mechanism, the 49.3.
00:47And that was all of those hours, 350 hours plus spent of parliamentary time debating how to pass this budget.
00:56It seems like Groundhog Day again, again, the same discussions, the same objections.
01:02And really, I think the commitment depended on an ability to try and find some compromise.
01:07And ultimately, I think that was what was achieved.
01:10We heard this new phrase, the negotiated 49.3.
01:14And it relied really on the fact that Le Corneau, the prime minister, was able to essentially get some sort of leverage from the socialists.
01:23And he was able to give a little bit of ground in terms of their demands for the budget,
01:29such that he was able to essentially secure a non-censorship agreement from him, from them, I should say.
01:35Now, look, people are saying that the far right says the budget is too socialist.
01:41The far left says the budget is too right wing.
01:44Now, ultimately, that reflects the parliamentary logics of this three-way divided parliament.
01:50But it also says that perhaps it's doing something which is walking that centrist line, which it pretends to try and do.
01:57The socialists certainly didn't get everything they wanted.
02:00Of course, the far left are saying they've been bought out and all the rest of it.
02:03They didn't achieve everything they wanted in terms of their alternative budget, but they did manage to actually move things forward a little.
02:12The centre-right said that France avoided a fiscal heresy.
02:16But importantly, Laurent Wauquiez said this wasn't worth bringing down the government over.
02:20And there has been some advance.
02:23And at this stage, a budget is better than no budget.
02:26And we're not there yet, but mid-February might be the moment when we start to see France actually passing a budget, actually moving forward and getting that stability it needs for development.
02:37Now, Andrew, there's been some discussion that we can expect more motions of no confidence to follow what's happened today.
02:45Do you think that's likely?
02:46I would say it's virtually a stick-on.
02:51It's one of the immediate recourses from the very divided opposition.
02:58I think the votes that came in last week were the most likely, if any, to have succeeded.
03:05We saw that the motion of censure that was put together by the collected left wing, from the far left to the Greens, really excluding just the socialists, was 269, I think, votes.
03:19So just shy, about 20 shy of an overall majority, which would have brought down the government.
03:25I think that was the most likely to have succeeded.
03:27It didn't.
03:29It did not succeed.
03:30And I would imagine now, unless there are new political fireworks yet to come, that this will now move through quite a similar range of discussions, really reflecting that frozen nature of the debate.
03:42If the negotiation of the budget in the first instance seemed like Groundhog Day, I think we'll see the same Groundhog Day of motions of censure being defeated and the government stumbling forward to pass this budget.
03:54Now, Andrew, you touched on this a little bit when you mentioned the socialists had managed to get a couple of things that they wanted, and the parties are sort of using this opportunity also to maybe air some grievances.
04:08So what other challenges are the opposition parties using during this current budget crisis to challenge the government position?
04:16Well, there's lots of different attempts to, you know, paint this as being something that's being pushed by Emmanuel Macron to use and manipulate his unpopularity in the wider press.
04:29We're seeing a lot of that from the far right, who really want to kind of play the president as the key opponent and paint any compromise with this.
04:37We see that from the far left as well.
04:39Well, of course, Jean-Luc Mélenchon, he's been criticising others, not just in the government, but also others in trade unions like the CFDT for, you know, kind of going along with some of these in terms of being social partners to the government's project.
04:53So really, there's a lot of leverage being put on different social partners attached to the government, but also trying to associate this with an unpopular president at the same time.
05:03This really reflects the fact that many people, many politicians are still looking forward to the upcoming municipal elections and then thereafter to the presidential elections and all that will follow with that.
05:16But as we've seen only in the last week, I think global politics teaches us that there is never something we can assume that there will be a quiet run in and everything will go as expected.
05:26There's a lot yet to come before that presidential election.
05:28And I think a lot more discussions to be had in terms of actually passing this budget.
05:33But for the moment, we're on track for mid-February, only a month and a half behind for a budget which, as Sébastien Le Corneau is presenting, as tax stability intended to achieve modest deficit reduction and try and keep France, you know, competing on its international commitments, keep it, you know, complying with what it can in Europe and keep it working with its international partners while not causing more domestic ructions.
05:57Now, Andrew, this budget should have been passed before the end of the year.
06:03It's nearing the end of January.
06:06So what could happen to France's economy if this budget crisis continues?
06:12Well, one of the big issues we often see, we've seen Emmanuel Macron criticizing, for example, European Central Bank in terms of its interest rates.
06:20France has fairly low inflation.
06:23It's had decent, if very modest, growth numbers come through.
06:28And there is, I think, a desire to ensure that France's deficit does not grow exponentially.
06:34Of course, the target for deficit reduction was about a year ago.
06:36They wanted it down to 4.7 percent, certainly down below 3.4 percent by 2029.
06:42They've kind of moved on that a little bit.
06:44It needs to be around 5 percent is what they're going for with this budget.
06:47Now, there are some in the centre-right who have their suspicions this might not succeed in the Horizon Group, for example,
06:52are very, very sceptical about whether or not that will happen.
06:57And one of the big things that always people need to look out for in terms of international markets and all the rest of it
07:01is really the spread between France and Germany, looking at how those deficits move,
07:08looking at how the economies move in track.
07:11And that's not an alarming place at the moment.
07:13France is moving a long, long term.
07:15It wants to reduce its deficit.
07:17But, I mean, look, France reducing its deficit.
07:20Francois Long spoke about that.
07:23Sarkozy spoke about that.
07:25Even Chirac spoke about that.
07:26It's been increasing really since the 80s.
07:30But it's only been since the mid-2000s that it kind of took off in a different direction from Germany.
07:35So it's always that relationship between France and Germany and understanding those ideas of credit splits
07:39and how they track that I think is important.
07:42France is in no great danger right now, but it has to keep that kind of budgetary kind of discipline,
07:47not to continue growing a deficit, which becomes unmanageable.
07:51After all, it means that you spend more money servicing borrowing,
07:55so spending €7 billion on interest payments, instead of, for example, investing €7 billion in France.
08:02And that's the logic that's driving much of the kind of budgetary policy,
08:07which Sébastien Le Carnot has been pursuing.
08:08Andrew, thank you so much for sharing your expertise with us on the program.
08:14That's Andrew Smith, a French historian and lecturer at Queen Mary University of London.
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