The British and French governments have their differences, but they have something very important in common: they\u2019re both running out of money.<\/p>\n
Yesterday, the UK 30-year bond yield \u2014 an indicator of how much it costs the British state to finance its debts \u2014 hit 5.6%<\/a>. That\u2019s a record level<\/a> for the 21st century. Meanwhile, on the other side of the Channel, the money markets are expressing similar doubts<\/a> about the long-term solvency of the French state. France used to be able to borrow at a significantly cheaper rate than countries such as Italy, but that advantage is eroding fast<\/a>.<\/p>\n Both governments know they have to curb their borrowing or face the prospect of a debt crisis. Though tax rises can take some of the strain, spending cuts are unavoidable \u2014 and in France, which already has one of the highest taxation levels in Europe, the urgency of austerity is all the greater.<\/p>\n This explains the make-or-break move of the French Prime Minister, Fran\u00e7ois Bayrou, to call a vote of confidence<\/a> in his government\u2019s budget proposals. Essentially, he\u2019s daring the opposition parties \u2014 which have a majority of seats in the National Assembly \u2014 to allow his budget to pass or risk political and fiscal meltdown.<\/p>\n With the parties on both extremes certain to vote against the government, the casting vote is held by the centre-left Socialists. So will they side with the other mainstream parties in recognising economic reality, or with the denialism of the hard Left? As of yesterday, it appears that they\u2019ve chosen the path of irresponsibility. Party leader Olivier Faure told<\/a> Le Monde that \u201cit\u2019s unthinkable the Socialists will give Fran\u00e7ois Bayrou a vote of confidence.\u201d<\/p>\n Perhaps Faure hopes he can extract more concessions if the current government falls and President Emmanuel Macron appoints a new PM. But without anything close to a majority, why would a replacement last any longer than Bayrou or his predecessors Michel Barnier<\/a> and Gabriel Attal<\/a>?<\/p>\n Macron may prefer to dissolve the National Assembly (again) in a further attempt to strengthen his position. He could also remind the Socialists that the gains they made in last year\u2019s elections<\/a> were due to a deal between the Left-wing parties and Macron\u2019s centrist allies to keep out the populist Right. This time round, however, the electoral backdrop would be an all-out attack by the Left against the centre \u2014 involving the confidence vote on 8 September and a national day of unrest<\/a> planned for two days later. Marine Le Pen must be licking her lips.<\/p>\n