France faces more turmoil with government on brink of collapse ahead of confidence vote

PARIS (Reuters) - France's fourth prime minister in less than two years, François Bayrou, faces defeat in a confidence vote on Monday, tipping the euro zone's second-biggest economy further into political and economic paralysis.

The minority government's expected collapse looks set to deepen France's problems at a critical time for Europe, which is seeking unity in the face of Russia's war against Ukraine, an increasingly dominant China and trade tensions with the United States.

The turmoil also threatens France's ability to rein in its debt, with the risk of further credit downgrades looming as bond spreads - a gauge of the risk premium investors demand to hold French debt - widen.

France faces acute pressure to repair its finances, with last year's deficit nearly double the EU's 3% limit of economic output and public debt at 113.9% of GDP.

The confidence vote is slated for Monday afternoon after a debate from 1500 (1300 GMT) with an opening speech by Bayrou, followed by leaders from all political groups. The outcome of the vote could come by around 1700 GMT.

Opposition leaders across the political spectrum made clear they would stick to their plans to vote to oust Bayrou.

"I want to tell you how happy I am that the government will fall today. For many French it's a relief," Manuel Bompard, from the hard-left France Unbowed, told broadcaster franceinfo, echoing similar comments from other parties. 

Should Bayrou indeed fall, President Emmanuel Macron will likely face the job of finding yet another government chief capable of steering a budget through parliament, less than a year after the ouster of Bayrou's conservative predecessor Michel Barnier.

Social tensions are also heating up. A number of nebulous groups that have mushroomed online have called on the French to "block everything" on Wednesday of this week, while the mainstream labour unions are planning social action on September 18 against plans for budget cuts. 

TILT TO THE LEFT?

Macron has so far ruled out dissolving parliament, as he did last year. France has been mired in a political crisis since that snap election, which resulted in an even more divided parliament.

Macron's own alliance, already shorn of a majority since 2022, saw its numbers fall further, while the anti-immigration, far-right National Rally emerged as the biggest party. A loose coalition of left-wing parties, now deeply divided, came in as the largest bloc. No camp has a majority. 

"This crisis was provoked and fuelled by President Emmanuel Macron and all those who have served him," Marine Le Pen, head of the National Rally's group of lawmakers, said on Sunday. "Today, the sick man of Europe, because of them, is France." 

After the fall of a conservative and a centrist as prime minister, many observers expect Macron to next look for a candidate from the ranks of the centre-left Socialists (PS). 

Any such candidate would face major challenges and still need to forge a delicate alliance with the president's liberal bloc, which opposes many of the left's ideas, including raising taxes for the wealthiest to plug the country's financial holes. They would also have to convince the moderate right to tolerate yet another minority government. 

Laurent Wauquiez, leading lawmaker for the conservative Les Republicains (LR) party, signalled he would not call for ousting a socialist prime minister. Party chief and Interior Minister Bruno Retailleau, however, disagreed. 

"There is no way we will accept a socialist prime minister", Retailleau said on Sunday. 

Like many in France, Mohamed, 80, who sells produce at the Aligre market in Paris, doesn't think the politicians will find a way out. 

"Come back in 10 days and you'll see nothing will have changed. There won't be a majority, there will be no budget."



(additional reporting by Elizabeth Pineau and Lucien Libert; writing by Ingrid Melander and Tassilo Hummel; Editing by Aidan Lewis)