France at risk of deadlock after Macron handed over a hung parliament

PARIS (Reuters) – President Emmanuel Macron faced calls for his prime minister to resign on Monday, questioning his ability to rule decisively after his camp lost a parliamentary majority.

Macron’s centrist rally is under pressure to get support from his opponents to save Macron’s reform agenda after a weekend election that led to a hung parliament. If it fails, France could face a prolonged period of political paralysis.

A source close to Macron said on Monday that Macron will invite all political parties able to form a group in the new parliament for talks on Tuesday and Wednesday.

The loss of an absolute majority for his team’s coalition is a painful setback for Macron, who won a second term just two months ago. French governments have long relied on the lower house of parliament, which largely shares their policy line and rubber stamp proposals.

“We must think of a new way of working at the institutional level,” European Affairs Minister Clement Bonn, a close ally of the French president, told LCI television.

Sunday’s second round of voting left Ensemble as the largest party, with an emerging left-wing coalition in second place, the ever-stronger far right and the Conservatives as potential kingmakers. Read more

“It’s going to be complicated,” government spokeswoman Olivia Gregoire told France Inter radio. “We have to be creative.”

Macron now needs to either form a broader coalition or accept the leadership of a minority government negotiating with opponents on the basis of each bill. His only consolation: the opposition groups are themselves staunch opponents, in some cases riven by internal divisions.

“Such a fragmented parliament would likely lead to political deadlock, with a much slower reform agenda,” said Philip Godin of Barclays.

This is likely to weaken France’s position in Europe and endanger the country’s already weak financial position.

Hardline figures from both the left and the far right have called on Prime Minister Elizabeth Bourne to resign after just over a month in office.

Gregoire said Macron would soon reshuffle his government.

What’s Next?

Nobis’ broad left-wing coalition led by Jean-Luc Mélenchon and the far-right led by Marine Le Pen have promised to hunt down Macron and his relentless administration in Parliament.

One of the main questions is whether Macron will try to cut a deal with conservative Republicans or go down the path of a minority government.

The head of the Republican Party, Christian Jacob, said the party would remain in the opposition. But while describing the situation as “almost unanimous,” some prominent members suggested that the party should cooperate with the government and act as a kingmaker.

The band and the Conservatives have compatible economic platforms, including support for a higher retirement age and nuclear power. Together, they would have an absolute majority.

First tests

Some cracks appeared on the left.

While Melenchon said Bourne should face a vote of confidence, Socialist leader Olivier Faure, another prominent figure in the Left Alliance, said that calling for Bourne’s removal from office is not the bloc’s current position.

If Macron fails to reach an agreement with the opposition, the eurozone’s second-largest economy will face political deadlock and possible early elections in the future.

The first major test will be the cost of living bill that Gregoire said the government will introduce within eight days when the new parliament first convenes.

Proposals on renewable energy due later in the summer will test the divided left over nuclear power.

Final figures showed Macron’s centrist camp winning 245 seats – well short of the 289 seats needed for an absolute majority, Nupes 131, the far-right 89, and Les Republicains 61.

Macron himself has not yet commented on the outcome of the elections, and the opposition urged him to break his silence.

And while the weekend’s election was a bitter setback for the 44-year-old, whose victory in April made him the first French president in two decades to secure a second term, financial markets have largely taken the outcome. The euro and stocks showed little effect, while French bonds saw some increasing pressure on Monday.

“The hope that some foreign exchange traders placed in Macron in 2017 have evaporated for some time, so that electoral victories or defeats do not play a major role in euro exchange rates anymore,” Ulrich Lochtmann, an analyst at Commerzbank, said in a note.

Additional reporting by Lee Thomas, Myriam Rift, Julian Ponthos, Elizabeth Pinault, Richard Love, Benoit van Overstreten, Tassilo Hamel; Writing by Ingrid Melander; Editing by Catherine Evans and Thomas Janowski

Our criteria: Thomson Reuters Trust Principles.