French Prime Minister Sebastien Lecornu survived two no-confidence votes on Thursday, October 16. The vote of no confidence followed his announcement of plans to suspend a controversial pension law to gain support in the National Assembly.
The first motion, proposed by far-left France Unbowed, was defeated with only 271 lawmakers supporting it, falling short of the 289 majority needed for the prime minister to resign. The second, submitted by the far-right National Assembly, received 144 votes.
Lecorn’s survival brings some relief from a political crisis that came close to triggering snap elections this week and left the country without a plan to deal with its bloated budget deficit. Avoiding another government collapse also reassured investors, lowering France’s borrowing costs.
The yield spread on Franco-German 10-year bonds – a key measure of risk – was little changed at 78 basis points. That was up from 89 basis points last week. The country’s benchmark CAC 40 ticked slightly higher, rising 0.8% and outperforming its European counterparts.
Pension Act of 2023
Sebastien Lecornu pledged to suspend the 2023 law that gradually raises the minimum retirement age to 64 from 62. Socialist lawmakers, who have a key role in parliament, said they would support the government on the matter.
However, the suspension of the pension law comes at a political price for President Emmanuel Macron, for whom the overhaul has been a symbol of his pro-business economic policy.
It also has financial costs of €400 million ($465 million) next year and €1.8 billion in 2027, according to government calculations.
What awaits Lecorna?
The way forward for pensions and the budget is also unclear, as Lecornu has said he will not use a constitutional provision – called Article 49.3 – to bypass a parliamentary vote, handing lawmakers much more control over legislation.
This heralds an unpredictable shift in dynamics in the National Assembly, as minority governments have until now relied on the tool to stop lawmakers’ more radical proposals.
The Socialists are already pushing back against austerity measures, including freezing social security payments and pensions, and warned that their decision not to convict Lecornu on Thursday did not give the prime minister a blank cheque.
“We will see what is in the budget; we have not committed to vote for it,” Boris Vallaud, head of the Socialist group in the National Assembly, told Franceinfo radio on Wednesday.
