FILE PHOTO: French far-right leader and member of parliament Marine Le Pen, President of the French far-right National Rally (Rassemblement National - RN) party parliamentary group, member of parliament Jean-Philippe Tanguy and Sebastien Chenu of the RN party, listen to the general policy speech of French Prime Minister Michel Barnier at the National Assembly in Paris, France, October 1, 2024. REUTERS/Sarah Meyssonnier/File Photo
PARIS (Reuters) -France's far right National Rally (RN) leaders said on Sunday that the government had rebuffed its calls for more budget concessions, raising the chances of a no confidence vote in the coming days that could topple Prime Minister Michel Barnier.
RN lawmaker Marine Le Pen had given Barnier until Monday to yield to the party's budget demands or face the threat that they would back a likely no confidence motion against his government, which would trigger its collapse.
But Le Pen said the government had in effect "put an end to discussions", she told French news agency Agence France-Presse in a major escalation of the standoff.
Earlier on Sunday she had said that Barnier faced a choice of either negotiating new concessions or face the threat that his government falls in a vote of no confidence.
Barnier already dropped a planned electricity tax increase last week, but the RN also wants him to raise pensions in line with inflation whereas he had aimed to raise some less than inflation to save money.
The RN also wants planned cuts to medication reimbursements to be scrapped and is unhappy the government may raise tax on gas. It also wants a cut in France's contribution to the European Union's budget among other demands.
The standoff between the government could come to a head as early as Monday if Barnier has to use aggressive constitutional powers to force a social security financing bill through, which would inevitably trigger a no-confidence motion from the left.
To survive the vote in the fractured lower house, Barnier needs the RN to abstain, otherwise his government and the budget bill could fall, plunging France deep into a political crisis.
Budget Minister Laurent Saint-Martin said on Sunday the government respected a compromise on the social security bill reached by lawmakers, which RN party head Jordan Bardella said he took to mean it would not make further changes.
"Through stubbornness and sectarianism, the minority government is putting an end to negotiations, running the risk of a vote of no confidence," Bardella said on X.
As the standoff worsens, Saint-Martin and Finance Minister Antoine Armand warned that French taxpayers and pensioners would suffer direct consequences in the event of a no confidence vote.
Armand said in le Journal du Dimanche weekend newspaper that would mean special emergency legislation would have to be passed to ensure that there would be a budget at the start of the year.
But it could only roll over spending limits and tax provisions from this year, which means pensions would get squeezed and tax thresholds would rise for 17 million people as neither could be adjusted for inflation.
The growing uncertainty over France's budget and the future of its government has put French debt and stocks under pressure, pushing the risk premium on the government's bonds to a more than 12-year high last week.
Standard & Poor's offered some relief on Friday, leaving its AA- rating on French debt unchanged although it raised doubts about whether France could stick to the government's deficit-reduction targets.
(Reporting by Leigh ThomasEditing by David Evans)
