The Downfall of the Barnier Government: An Unprecedented “Special Law” for a Transitional Budget

With the censure of the government and the absence of a budget for the upcoming year, France is preparing for an exceptional measure: the adoption of a special law. This would be a first under the Fifth Republic.

An Unprecedented Political and Budgetary Context

Following Michel Barnier’s official resignation, France is entering a period of political and financial uncertainty. The previously proposed budget texts are now obsolete, along with the planned 60 billion euros in savings for 2025.

A Transitional Law in the Works

To avoid an American-style “shutdown,” the government is working on implementing a special law to adopt a transitional budget for January 1. The teams of the Minister of Public Accounts, Laurent Saint-Martin, have been examining the technical and legal aspects necessary for drafting this bill for several days.

This law, which is only four pages long, will authorize the government to collect taxes, borrow on financial markets, and set expenditure plans for the upcoming year. However, the budget allocated to ministries in 2025 will be the same as in 2024, as the only option is to maintain the last adopted budget.

Repercussions for Taxpayers

This legislative measure, voted by Parliament, grants the government the temporary right to collect taxes. A similar precedent occurred in December 1979, when the Constitutional Council annulled a budget due to procedural reasons. This time, however, the context is entirely different, and the current situation remains exceptional.

However, a significant side effect must be noted: automatic tax increases for 18 million households, warns Michel Barnier. Consequently, around 380,000 households will become taxable, as the income tax scale will not be adjusted for inflation.

A Race Against Time

To ensure the adoption of a budget by January 1, the special law must be presented to Parliament by December 19. Some analysts fear a “slow-burning” crisis if France is left without a budget for the next year. In a statement released from Wednesday night to Thursday, the rating agency Moody’s indicated that the censure “reduces the likelihood of a consolidation of public finances.”