France has experienced a wave of protest and a credit rating downgrade after a no-confidence vote forced President Emmanuel Macron to reshuffle his government for the second time in 12 months.
The political and social instability has battered confidence in the country’s credit rating and nudged business confidence lower. Fitch Ratings downgraded the European Union (EU)’s second-largest economy to an A+ from an AA- rating.
“The government’s defeat in a confidence vote illustrates the increased fragmentation and polarization of domestic politics,” the global credit rating agency said in a report on September 12. “This instability weakens the political system’s capacity to deliver substantial fiscal consolidation.”
Protests struck France after then-Prime Minister François Bayrou lost a September 8 no-confidence vote. The centrist prime minister initiated the vote after facing resistance from both the right and left against his proposed austerity measures.
Demonstrators protested the decision by Macron to appoint long-time political ally and former Minister of the French Armed Forces, Sébastien Lecornu, as Bayrou’s replacement on September 9. The country witnessed mass nationwide strikes on Thursday against the government’s proposed austerity measures.
The instability will make it difficult for the government to reduce the fiscal deficit to 3% of GDP by 2029, as targeted by the outgoing government, according to Fitch. It’s also unlikely that the new French government will be able to implement a budget plan sufficient to achieve the necessary cuts, the ratings agency said.
Half-A-Million People Protest Austerity Measures
About half a million people, including 55,000 in Paris, demonstrated on Thursday against potential austerity measures that could hurt public sector workers. One in six primary and secondary teachers walked out of classrooms across the country.
Outside the northern city of Lille, 300 school children blocked entry to their secondary school with signs that called other students to “block your school against austerity.” Nine out of ten pharmacies closed, and only three of Paris’s 16 metro lines functioned as usual, Le Monde reported
“More than ever, the time for action is now,” the French General Confederation of Labor (CGT) said in a statement. “The …