France on the brink of economic collapse | Nina dos Santos

a huge number of French companies are ingrained in all of our economies around the world uh with their borrowings and so on and so forth it is crucial for the Euro Zone and uh the United States could possibly impose 10% plus tariffs on Goods coming from places like France and also Germany just as these two crucial members of the EU are also politically on the brink as well once again the French government is teetering on the verge of a collapse the Prime Minister Michelle barnier is at risk of no confidence motion as he presents his

Social Security Financing plan Nina Des Santos is the former Europe editor of CNN and joins us now uh Nina make a little bit of sense of this for us if you can uh talk us through what has triggered the no confidence motion well what we've seen in the last half hour or so is Michelle barer stand up in the assembly National there is the French Parliament and start to deliver this social security part of the budget that France the second biggest economy inside the EU desperately needs to pass with the government that's been nominated um

from one of the most unpopular parts of the political Spectrum Michelle B himself is a conservative he's not an ideal candidate but he's the person who after Emanuel macron uh announced that snap election over the summer split the vote in three different ways among three different parties barer he thought was the one who is the most likely in terms of being an experienced and palatable enough politician to the far right M lupin's party that he could probably say the best chance of trying to get any legislation through and the biggie of course is the budget

which is what's going through the French Parliament this week now Michelle baher has two options for trying to get this law through and this is one of the reasons why financial markets are on tenter hooks at the moment looking at what's happening in France he could either put it to a vote which he might lose he might scrape it through if the far right National rally party abstain but if they vote against it well he could be torpedoed otherwise he could use a constitutional maneuver to avoid putting it through a vote because he doesn't have

the numbers but that could leave him exposed to a no confidence vote which could happen on Wednesday so the stakes are extremely high we're likely to see which way he's going to go this afternoon and in Practical terms Nina what actually happens to a government uh if it collapses you know we say this as a term as if everybody understands what comes next but what does it mean well for France it's a really complicated situation uh there's so much riding on it largely because France can't have another set of legislative or parliamentary elections uh for

another six months you can only have one per year and the last one was held um prematurely by Emanuel macron in the summer so the real calculation Marine leen's party is trying to make here because remember Michel barer is from the as I said before least popular party the Republic you know these are the really famous conservative party of France but it's been torpedoed over the last few years in terms of its support uh he governs with the sort of tcid approval of the far right but she has to make the political calculation of whether

or not she would be blamed if France's economy goes south and the country gets gripped in a state of stasis if the bond markets run wild and she would be penalized on the other hand the other thing she has to think about is her itical future cuz what she really wants to do is go for the French presidency the next time it's up in two years time in 2027 and uh the problem is she's facing some legal travails of her own that could knock her out of that race those legal travails could start to Bubble

back up in the next month or two so she's trying to figure out whether now is the moment to try not just torpedo Mich B's government but also try and push for Emanuel Macon to resign technically he doesn't have to do that but French public opinion is really going against him there was a poll just the other day that estimated that half of French voters actually think that it's time for M to go there is never a good time for a government to collapse but if we look at what France uh actually does on the

world stage this is a particularly crucial time isn't it I mean uh we shouldn't neglect the fact that it played its part in the ceasefire in Lebanon obviously its strength is relevant to Ukraine I these really are very crucial times aren't they absolutely and Dean mcon has been one of those figures who's been very loud on the international stage talking about how Europe and NATO needs a far more strategic Vision if the United States When Donald Trump comes back into office uh the start of next year starts to sort of disassociate itself from being the

security guarantor of this part of the world particularly with regards to Germany which is the other big political and economic decision maker across the EU with France in political possibly political chaos here we already know that its economy is in a far worse shape than some other smaller Euro Zone countries if both Germany and France find themselves facing uh economic spirals as well as political problems because Germany's heading to the polls next year too that could be a real nightmare for trying to sort out problems like the war in Ukraine When Donald Trump has made

it very clear that he would like to see Ukraine possibly capitulate on some of its terms if there were to be a peace deal um and as you said before France has a huge role to play in places like Lebanon because of its history and its long-standing cultural ties there uh so what's happening in France really matters geopolitically it also matters economically as well because if you look at the economics of France its deficit is already at 6.1% of GDP that is more than double the eu's own top limits for deficits uh for other crucial

countries um it's got a huge bond market a huge number of French companies are ingrained in all of our economies around the world uh with their borrowings and so on and so forth it is crucial for the Euro Zone and uh the United States could possibly impose 10% plus tariffs on Goods coming from places like France and also Germany just as these two crucial members of the EU are also politically on the brink as well so it's partly geopolitical uh this issue but it's also very much economic as well and that's why some say we

could be seeing the start of potentially another Eurozone crisis 2.0 like 15 years ago and for the average French person you know sorry to apply the adjective average uh the to anybody really but does it mean the same thing that a financial crash has meant in this country that suddenly all of your household borrowing goes up a mortgage becomes incredibly difficult to get it's that kind of hardship and penury well mortgages are quite different across the Euro Zone particularly in places like France where uh people don't necessarily relever and keep the uh outstanding debt and

Rel leverage every two three five years over there they're much much longer mortgages and people have the obligation to pay them down um so slightly different in terms of that also the home ownership rates are a bit different across the Euro Zone but the point really is just that uh you know there are huge French banks this is a huge part of the Euro Zone indeed the the person at the Helm of the European Central Bank Madame Christine lagard is a French politician and she used to be the head of the IMF before at the

time when countries like America France also Germany were having to Dole out very hard economic medicine to other weaker Eurozone members like Greece Portugal um Ireland and Spain and so on and so forth uh so it is uh some in the EU might say a moment of Reckoning for France because it's always been an EMB harassment frankly that France has been allowed to get away with such high structural uh spending and deficits but your average French person though just going back to your question and to answer it properly um it would be a big shock

because the reality is is that and I know having been brought up myself in French um and spend a lot of time in the country there are higher expectations for when it comes to the amount of State support your average citizen expects in terms of benefits entitlement you know the medical system and so on and so forth so France really can't afford to get this wrong which is why Michelle berer says he needs to try and push through what is essentially an austerity budget including about 60 billion EUR worth of uh tax hikes and also

some severe spending cuts that is what has irked both Mahin Lupen on the right but also uh the other third of the vote on the left on the far left who also say look now is not the moment people are coping with the cost of living crisis why should they have to swallow austerity at A Moment Like This uh Nina thank you very much Nina desantos is the former Europe editor of CNN