PARIS – After two years without an approved budget, the French government has now forced one through without a parliamentary vote. This latest twist in France’s political and fiscal drama – and the absence of any immediate market backlash – reveals how much the European Monetary Union (EMU) serves the country’s interests, just as the single currency’s French architects intended. But it is also, strange to say, serving the interests of the far-right National Rally’s (RN) Jordan Bardella, the frontrunner ahead of next year’s presidential election.
When the EMU was designed, Germany’s Bundesbank was the dominant force in European macroeconomic policy. Its replacement by the European Central Bank fundamentally altered the distribution of monetary power, allowing France to enjoy German-style interest rates while benefiting from the ECB’s underwriting of French fiscal largesse.
It was only during the eurozone debt crisis of 2010-12 that the ECB’s role as an effective fiscal backstop was cemented, when then-ECB President Mario Draghi famously pledged to do “whatever it takes” to save the euro, establishing the central bank as a lender of last resort. To correct the design flaw of a monetary union composed of fiscally sovereign states, the ECB’s support for member states’ sovereign bonds was made conditional on fiscal retrenchment in line with the Maastricht Treaty, which caps annual budget deficits at 3% of GDP and public debt at 60%. While the eurozone’s southern member states were forced into austerity, France escaped that fate. The European Commission, tasked with policing the bloc’s fiscal rules, has consistently been lenient toward France despite its chronic violations, largely for political reasons.The term “exorbitant privilege,” originally coined by then-French finance minister Valéry Giscard d’Estaing in the 1960s to describe the advantages conferred on the United States by the dollar’s status as the world’s reserve currency, seems equally applicable to France’s position within Europe. As a cornerstone of the monetary union – and, by extension, the wider European economic system – France is effectively untouchable, enabling it to expand deficits and debt without a meaningful increase in borrowing costs.
Nowhere has this reality been clearer than in the outcome of France’s annual budget deliberations. Despite breaking its promise not to use decree powers to adopt a budget without parliamentary approval, Prime Minister Sébastien Lecornu’s government survived two no-confidence votes after the Socialist Party abstained in exchange for certain spending concessions.
Lecornu’s maneuver diminishes the already-slim chances of even a modest reduction in the budget deficit, which is projected to reach 5.4% of GDP in 2026. But since the European Commission is unlikely to enforce the EU’s fiscal rules, bond markets see little risk that political turmoil could prevent the ECB from stepping in if needed.
That helps explain why French sovereign bonds rallied after the budget was pushed through. Another government collapse might have prompted President Emmanuel Macron to carry out his threat to dissolve parliament for the second time in under two years, deepening political uncertainty.
By this time next year, however, France will be in the midst of a presidential election campaign that will determine its economic and political trajectory. Unless an appeals court overturns the ruling, which barred RN leader Marine Le Pen from running, Bardella, her 30-year-old lieutenant, will be the party’s nominee to succeed Macron. Recent opinion polls show Bardella handily defeating all likely rivals. Beyond his youth, Bardella is more electable than his mentor simply because he is unburdened by the toxic associations attached to the Le Pen name.
If he manages to avoid unforced errors and remains the frontrunner, the political debate in France and across Europe will increasingly focus on one critical question: Would a Bardella victory trigger another eurozone crisis and put the European project itself at risk?
The answer depends less on Bardella’s policy agenda than on France’s exorbitant privilege within the EU. Once in the Elysée Palace, Bardella would have every incentive to exploit these structural advantages rather than challenge them. His interview last November with The Economist, in which he called for the ECB to buy French government bonds, certainly points in that direction.
That said, a Bardella presidency would not be without risks. His recent book, Ce que veulent les Français (“What the French Want”), contains the genre’s familiar elements, including an account of his hard-scrabble upbringing in the poor Parisian suburb of Saint-Denis, raised by an Italian immigrant single mother. But it also offers some insight into how he might approach economic policy.
Perhaps most revealing is the refrain that closes each chapter, in which Bardella depicts the daily struggles of French people in different walks of life and proposes how to raise living standards: reindustrialize under the guidance of a protectionist state, cut bureaucratic red tape, and reduce wasteful government spending. Core RN policies, such as curbing immigration and requiring immigrants to assimilate into French civic culture, are relatively underemphasized, perhaps in an effort to broaden his appeal.
But Bardella’s protectionist ambitions will be constrained by the EU’s institutional framework. Because member states have effectively delegated external trade policy to the European Commission, the only way for France to pursue Donald Trump-style protectionism outright would be to leave the bloc. Short of a “Frexit,” Bardella is far more likely to work within the EU’s existing arrangements, which already operate in France’s favor.
One such arrangement is the growing use of EU-level debt issuance to finance investment in European defense industries, driven by the need to reduce dependence on the United States. A substantial share of the EU’s recent €90 billion ($107 billion) loan to Ukraine will be used to procure military equipment from European manufacturers. As the EU member state with the largest and most diversified defense industry, France is well-positioned to become a major beneficiary of this and subsequent rearmament initiatives.
Ultimately, Bardella’s message to French voters is one of reassurance rather than rupture. His rhetoric casts him as a savvy opportunist seeking to exploit the system’s existing advantages, not an arsonist bent on dismantling the EU. The problem is that the system itself is brittle. Whichever path he chooses, troubling uncertainty seems a given.
About the Auhtor:
Brigitte Granville is a Professor of International Economics and Economic Policy at Queen Mary University of London.