On 5 September, President Macron appointed Michel Barnier as France’s next Prime Minister. France has had a caretaker government since the resignation of Attal's government in mid July and Macron has spent much of the last 6 weeks trying to identify someone who would take on the job, and who stands a chance of constituting a government that will not be censured immediately by Parliament. Barnier will have the support of his own centre-right Les Républicains and Macron’s centrists, but not the left who won the most seats in the recent election.

Barnier’s first tests

The first indication of how long this government is likely to last will be Barnier’s ability to appoint a cabinet and to draw in figures beyond his political family. Barnier has said he does not want a government purely of the right and wants figures from across the political spectrum to serve, but any figure from the left who agrees to do so is likely to be disowned by their party. So the government is likely to be one of the centre and centre-right, dependent on support (or at least not a veto) from Le Pen's right-wing populist Rassemblement National.

The next test will be the economic programme Barnier's government can pull together. France is due to submit a budget reduction plan to the European Commission by 20 September (although this seems likely to be extended by a few weeks); to present a budget to Parliament in early October; and then to get it passed. 

It is unlikely that France can in practice meet the requirements of the EU's fiscal pact, which would mean reducing the deficit from 5.5% currently to 3% by 2027. The question for Barnier will be whether he submits a budget which meets EU requirements but which is unlikely to be achieved; or to grasp the nettle now and ask the EU for a longer runway to reduce the deficit.

Le Pen gets to have her cake and eat it

Assuming Barnier can put together a budget which Macron's centrist party (over which his influence has diminished) and his own party support, he should have the numbers to get a budget through Parliament, provided Le Pen's RN abstains. In appointing Barnier, Macron will have had reason to believe that Le Pen would not bring the Government immediately - as Le Pen said on 8 September, “Macron took the National Rally’s criteria into account in choosing his prime minister... [Barnier] seems to have reached the same conclusion as we have on ­immigration.” For his part, Barnier has put some distance between his view of the RN and Macron's: “I don’t have much in common with the ideologies of the National ­Rally, but I respect it.” Macron has in the recent past called Le Pen’s party “anti-republican” and a threat to democracy. All this means Le Pen gets to have her cake and eat it - some influence over the programme of the government without being directly associated with it; with the ability to bring it down if and when it suits her.

Less political instability - but for how long?

As was clear during the Brexit negotiations, Barnier is not a policy details person. But he has skills of communication and consensus-building which could see him survive the critical first few weeks of this government. If he does, the chances of his government surviving until the first anniversary of July's election (the first point at which new elections could take place) improve dramatically. This would represent progress in political stability in France - but from a low-base and it is not clear for how long.  Not in recent memory has the political leadership of France and Germany been so weak at the same time, with inevitable consequences for the ability of the EU to make progress on the big issues, not least the pressing challenges of competitiveness detailed in Mario Draghi’s recent report produced for Commission President von der Leyen.

If you are interested in more insight like this, NorthStar Advisory produce a weekly report for our clients on what's happened in UK and geopolitics and, more importantly, why it happened and what might happen next. If you would like to be added to the mailing list, please contact northstar@northstaradvisory.uk.