Almost 25 years ago, when France and Germany were experiencing one of those “love and cooperation” periods, then-French President Jacques Chirac emphasized: “When France and Germany move forward, all of Europe moves forward. When they don’t, it stops.”
The picture today has changed: the two largest economies in the eurozone are living parallel lives, their economies faltering. Both are in a political vortex with their governments not surviving a vote of no confidence. And while Germany is heading for early elections on February 23, France’s constitution does not allow for early elections before next summer. Newly appointed Prime Minister François Bayrou therefore faces the daunting task of forming a stable government after the collapse last week of the country’s shortest-lived government since 1958.
The no-confidence motion in Germany
In Germany, the situation appears to be clearer. Chancellor Olaf Scholz has asked the Bundestag for a vote of confidence, which he expected (and expected) to lose. German President Frank-Walter Steinmeier now has 21 days to dissolve parliament. New elections must then be held within 60 days of the dissolution, with the date already set for February 23.
It is recalled that under the German constitution, which was designed to prevent governmental instability after the turmoil of the Weimar Republic in the 1920s and 1930s, the vote of confidence – which only the chancellor can request – is the primary mechanism for dissolving parliament and triggering early elections.
The constitutional clause has been used only five times since 1949, three of which resulted in early elections. While Willy Brandt and Helmut Kohl both won subsequent elections and remained chancellors, Gerhard Schröder lost to Angela Merkel in 2005.
The markets
In France, the budget deficit is expected to exceed 6.1% of GDP this year, more than double the eurozone limit. Public debt is at 110% of GDP and rising, and bond markets this month rated France as marginally less creditworthy than Greece.
In Germany, whoever becomes chancellor after the February 23 election will have to deal with the world’s worst-performing major economy, plagued by high energy and labor costs as well as red tape and crumbling infrastructure.
With France unable to hold new parliamentary elections until July and Germany likely without a new government until June, political weakness at the top of the EU’s two most influential countries will inevitably make decision-making in the EU more difficult.
Paris and Berlin are seen as the EU’s main powerhouses, guiding policy and setting the main contours of its agenda. With both capitals unable to make major policy decisions due to the lack of strong governments, the bloc could face months of delays. And all this at an extremely complex time for the eurozone.
The threat of recession
The parallel economic and fiscal woes of the two powers will also weigh on the EU. Some analysts believe that the bloc’s two largest economies – which account for 41% of the 27-member EU’s total GDP – will shrink economically by 2025.
The timing couldn’t be worse, with Europe grappling with the policies of Donald Trump’s second term as US president. And there is no light in sight at the end of the economic and political crisis in the two countries…
A recent poll gives the centre-right CDU/CSU 31%, followed by the far-right Alternative for Germany (AfD) on 18%, Scholz’s SPD on 17% and the Greens on 13%. The FDP and the new left-wing conservative Alliance are both hovering just around the 5% threshold for parliamentary representation.
Political turmoil in France
France’s current political problems – the country is going through its worst period of political instability since World War II – stem largely from Macron’s decision to dissolve parliament after his centrist forces were heavily defeated by Marine Le Pen’s far-right National Rally (RN) in the spring European elections.
In the parliamentary elections, the New Popular Front (NFP), a coalition of left-wing parties ranging from the mainstream Socialist Party (PS) to the radical left France Unbowed (LFI), led by political stalwart Jean-Luc Mélenchon, won the largest number of seats.
Macron’s alliance came in second place, and the RN (although it finished as the largest single party) came in third. Parliament was divided into three roughly equal and rival blocs – broad left, center, and right/far right – none of which came close to a parliamentary majority.
After weeks of division and refusal to appoint a prime minister from the left, Macron tapped Michel Barnier, a veteran conservative and the EU’s chief Brexit negotiator, who was backed by a fragile minority coalition of centrist and center-right lawmakers.
This month, the far-right RN joined forces with the left-wing NFP to topple Barnier’s government in a vote of no confidence over the 2025 budget, which included about €20 billion. €16.5bn (£16.5bn) in tax increases and €40bn in public spending cuts.
Bayrou, his replacement, must try to build a more stable government majority. The parliamentary arithmetic, however, remains the same.
