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PARIS: France found itself mired in yet another crisis on Tuesday, after Prime Minister Francois Bayrou’s gamble to win backing for his deeply unpopular debt-reduction plan backfired, plunging the country deeper into political and financial instability.

French markets tumbled after Bayrou jolted the political establishment out of its summer slumber on Monday with his unexpected move to seek a September 8 confidence vote on his debt-cutting plan. His proposal was roundly rejected by opposition parties, who said they would relish the opportunity to cut short his minority government’s time in office.
In a symbolic moment that underlined his predicament, Bayrou tripped and nearly went flying as he took to the stage on Tuesday to deliver his first comments since the previous night’s announcement. He said lawmakers must now choose between “chaos” and “responsibility,” and urged the French to pressure their representatives to make a prudent choice ahead of September 8.
“I am not asking anyone to change his mind but one can think it over,” Bayrou later told journalists.
If Bayrou falls, Macron could dissolve parliament and hold fresh legislative elections — a move he has previously rejected — or install a new government. However, neither course of action is likely to solve France’s budget issues or political gridlock.
A source in a key ministry said they expected Macron to opt for a new prime minister.
“The French prime minister’s decision to call an early vote of confidence is most likely to trigger his replacement with yet another prime minister or (less likely) fresh legislative elections,” Capital Economics analysts wrote.
“Either way, France’s budget deficit will remain well above the level needed to stabilize the debt ratio.”
Interior Minister Bruno Retailleau, who leads the conservative Republicans, said it would be “irresponsible” and “against France’s interests” to vote for the government to fall.
Others disagreed.
The far-right National Rally, led by Marine Le Pen, said it wants Macron to call a snap parliamentary election.
“I don’t see what new prime minister wouldn’t be immediately censured,” a source close to Le Pen told Reuters.
The Socialists, whose vote will be crucial, also said they would vote against Bayrou.
“We need a different prime minister and, above all, a different policy,” lead Socialist lawmaker Boris Vallaud wrote on X.
The confidence vote will be held two days before protests called by various groups on social media and backed by leftist parties and some unions, recalling the Yellow Vest unrest that erupted in 2018 over fuel price hikes and the cost of living.
“Unless Francois Bayrou is confirmed in office — which is a hypothesis today that appears unlikely — we will enter a new phase which will be a phase of destabilization,” said pollster Jean-Daniel Levy, predicting negative consequences for the economy and France’s image abroad.
What next?
A source close to Bayrou said his government was open to negotiation on the details of his budget proposals, though they were adamant that a budget squeeze is necessary.
Bayrou said on Tuesday he would ask high-income taxpayers to make a special effort to help curb the deficit.
Bayrou knew a no-confidence vote would eventually be tabled over the budget and decided to get ahead of the opposition, the source said. France’s blue chip CAC40 index was down 1.5 percent on Tuesday, having fallen 1.6 percent late on Monday. Banking giants BNP Paribas and Societe Generale slid more than 6 percent each.
Meanwhile, 10-year French government bond yields briefly rose to 3.53 percent, the highest since March, before steadying at 3.50 percent. When a bond’s yield rises, its price falls.

COPENHAGEN: Denmark is not ruling out the possibility of recognizing Palestinian statehood as long as it is democratic, Danish Prime Minister Mette Frederiksen said on Tuesday.
“We’re not saying no to recognizing Palestine as a state,” she told reporters.
“We’re in favor of it. We have been for a long time. It’s what we want. But of course we have to be sure that it will be a democratic state,” she added.
On Sunday, more than 10,000 people marched in a protest in central Copenhagen calling for an end to the war in Gaza and urging Denmark to recognize Palestinian statehood.
In an interview with the Danish daily Jyllands-Posten on August 16, Frederiksen said Prime Minister Benjamin Netanyahu was “now a problem in himself,” and that his Israeli government was going “too far.”
“Netanyahu’s continued and very violent actions in Gaza are unacceptable,” she wrote on Facebook the same day, adding that she has, since Hamas’ October 7, 2023 attack, supported Israel’s right to eliminate the “threat posed by Hamas.”
Recognition of a Palestinian state must serve “the right goal,” she stressed on Tuesday.
“It must come at a time when it genuinely benefits a two-state solution. And where a lasting and democratic Palestinian state can be guaranteed,” she said.
“And it must of course be done with (Hamas’s) mutual recognition of Israel.”
In the meantime, Denmark plans to use its current EU presidency to increase pressure on Israel.
“It will be difficult to rally the necessary support but we will do everything we can,” she said.
The October 7, 2023 attack on Israel by Hamas militants resulted in the deaths of 1,219 people, mostly civilians, according to an AFP tally of official figures.
Israel’s retaliatory offensive has killed more than 62,744 Palestinians, mainly civilians, according to figures from Gaza’s Hamas-run health ministry which the United Nations considers reliable.