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Macron’s call for elections in France adds to fears of financial woes

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Investors made clear on Tuesday the depth of their concerns over President Emmanuel Macron’s gamble to call for new elections in France, driving up the nation’s borrowing costs, pushing down stock prices and prompting the Moody’s ratings agency to warn it may downgrade French sovereign debt as risks of political instability rise.

Mr. Macron’s dissolution of the lower house of Parliament on Sunday after his party was battered by Marine Le Pen’s far-right party in European Parliament elections has ignited concerns that the government could grind to a stalemate. The turmoil has focused attention on France’s fragile finances, and the prospect of legislative gridlock that could undermine the government’s ability to address it.

“This decision will not ease the economic challenges facing the country,” Philippe Ledent, senior economist at ING Bank, wrote in a note to clients. Public finances and the performance of the French economy will be “at the heart of the electoral campaign,” he added.

As the head of France’s conservative party on Tuesday called for an alliance with the far right to beat back Mr. Macron ahead of two rounds of national voting that will start on June 30, investors punished French stocks, sending the Paris Bourse down 1.33 percent, after a sharp fall on Monday.

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The yield on France’s 10-year government bonds rose sharply for a second day amid investor unease over France’s ability to manage its finances. Bond yields are indicative of the government’s borrowing costs, and elevated levels would make it harder to stimulate the economy and manage the country’s debt.

France is suddenly facing uncharted territory. The prospect that Ms. Le Pen’s party, the National Rally, could triumph in the hastily called legislative elections — which could weaken Mr. Macron’s grip on power and possibly force him to govern with a prime minister from his political opposition — risks piling economic havoc atop the political toll.

“Fiscal and domestic economic policies are set by the government, which needs a majority for its legislation in Parliament,” said Holger Schmieding, chief economist at Berenberg Bank in London. “For a fiscally challenged France, new parliamentary elections add a level of uncertainty.”

The turmoil comes with the French economy in a rough patch, as the wars in Ukraine and Gaza, economic slowdowns in Germany and China and record-high interest rates take a bigger-than-expected toll on growth. Mr. Macron’s government recently warned that growth would be weaker than expected this year, and his finance minister, Bruno Le Maire, was charged with finding more than 20 billion euros in savings quickly as the nation’s finances deteriorate.

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After the government spent lavishly during the pandemic to support the economy and shield consumers from high energy prices, French debt has climbed to 3 trillion euros, or 110.6 percent of gross domestic product. The government deficit for 2023 stands at €154 billion, accounting for 5.5 percent of gross domestic product, one of the worst performances in the eurozone.

France is now at risk of breaching European Union budget rules that restrict government borrowing and is likely to be sanctioned next week by the European Commission, the E.U. executive branch. On Tuesday, Mr. Le Maire warned that France could be thrown into a “debt crisis” if Ms. Le Pen’s party gained power.

Paris had been increasingly concerned about French debt being downgraded by international rating agencies, which increases borrowing costs. On May 31, Standard & Poor’s downgraded France’s debt rating, rattling the government, whose economic credibility has been one of its main political assets.

Then on Tuesday, Moody’s warned that Mr. Macron’s maneuver could deepen France’s financial woes by creating “a polarized political environment.” By dissolving the National Assembly, Mr. Macron had increased the risks that France will not be able to bring its budget back in line, raising the prospect of a further downgrade.

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“There is a high risk of greater political instability in the future,” the agency said, adding that Parliament could be thrown into political gridlock for at least a year because the winner of the upcoming elections was unlikely to have an absolute majority. That could mean that almost any legislation Mr. Macron puts forward would be blocked, including measures to cut government spending needed to avoid breaching the European Union’s fiscal rules.

The danger is that France’s high debt balloons even further, which could lead to a faster-than-expected rise in interest payments, Moody’s added.

Ms. Le Pen and her firebrand protégé, Jordan Bardella, have backed higher public spending to address issues that have driven waves of voters to the National Rally party, especially a loss of purchasing power brought by high inflation and energy costs, and demand for job creation in areas that have been devastated by industrial losses to globalization.

Mr. Macron has sought to play the role of a European leader during Russia’s invasion of Ukraine, but the National Rally has assiduously been courting voters, especially in rural areas.

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Ms. Le Pen’s party won by large margins this weekend in places that have lost jobs to deindustrialization. The National Rally has grabbed bigger audiences for its pledges to bolster purchasing power, create employment through “intelligent” protectionism and shield France from European policies that expanded globalization.

Mr. Macron has been trying to counter the rise of National Rally, which has seized on the economic slowdown, immigration issues and regulatory requirements imposed by the European Union to attract disenchanted voters.

Now in the middle of his second term, Mr. Macron has sought to show that he was moving France back to business, burnishing its image especially with foreign investors. He has overhauled France’s rigid labor code to make it easier for companies to hire and fire and is streamlining France’s generous unemployment system.

He is also overseeing an enormous subsidized industrialization program that has attracted hundreds of billions of euros in commitments from multinational companies. These include the creation of four big battery plants for electric cars in northern France and a beefed-up pharmaceutical industry with new investments from Pfizer and Novo Nordisk, which will expand production of its popular Ozempic and Wegovy weight-loss drugs.

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Last month, Mr. Macron hosted hundreds of global chief executives at the Palace of Versailles for an annual business conference that drew large new pledges, including a €4 billion investment by Microsoft for a new data center in eastern France.

Even so, France’s economic slowdown has been noticeable, particularly to voters who have swung to Ms. Le Pen’s party. Many feel inequality has widened, rather than narrowed, as Mr. Macron pledged, in the seven years since he took office.

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Putin open to ‘lasting peace’ agreement in Ukraine -Trump envoy

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US President Donald Trump’s special envoy said Monday that Russian leader Vladimir Putin was open to a “permanent peace” deal with Ukraine, following talks seeking to end the more than three-year war.

Trump has been pressing Moscow and Kyiv to agree to a ceasefire but has failed to extract any major concessions from the Kremlin, despite repeated negotiations between Russian and US officials.

On Friday, Trump’s special envoy Steve Witkoff met with Putin in Saint Petersburg — their third meeting third since the Republican leader returned to the White House in January.

Witkoff said during a Fox News interview televised Monday that he sees a peace deal “emerging,” and that two key Putin advisers — Yuri Ushakov and Kirill Dmitriev — were in the “compelling meeting.”

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“Putin’s request is to get to have a permanent peace here. So beyond the ceasefire, we got an answer to that,” Witkoff said, acknowledging that “it took a while for us to get to this place.”

“I think we might be on the verge of something that would be very, very important for the world at large.”

He added that business deals between Russia and the United States were also part of the negotiations.

“I believe there’s a possibility to reshape the Russian-United States relationship through some very compelling commercial opportunities, that I think give real stability to the region too,” he said.

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Despite a flurry of diplomacy, there has been little meaningful progress on Trump’s main aim of achieving a Ukraine ceasefire.

Putin last month rejected a joint US-Ukrainian proposal for a full and unconditional pause in the conflict, while the Kremlin has made a truce in the Black Sea conditional on the West lifting certain sanctions.

AFP

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Anger, sorrow and bitterness as Plateau Community buries 51 killed in fresh attack

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It was anger, sorrow and bitterness as the Zike community of Bassa Local Government Area (LGA) of Plateau State laid to rest the 51 victims of the recent attacks on the area.

The victims were gunned down early Monday when the perpetrators stormed the village and started shooting sporadically, leading to scores of deaths in what has become a recurring incident in the state.

At the solemn event, members of the community recalled how the incident happened, describing it as “disheartening”.

“I can tell you the situation is very disheartening,” a community leader, Davidson Malison, said, adding that “we are still searching for more corpses.”

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“Something needs to be done to put an end to this,” Davidson said.

For a women leader, Mary Dikwa, the situation has gone out of hand.

“They have been killing us in this our community, and several times, they will come and attack us,” the Irigwe women leader said.

“They have been coming and killing, killing us every time. We are tired of this killing. Enough is enough. Our children are dying, our husbands are dying. Our crops have been razed down by this herdsmen,” she added.

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Monday’s carnage came despite reassurances from government authorities and less than two weeks after a similar dastardly killing left over 50 people dead and several others nursing injuries.

Irked by the recurrent deadly attacks on the state, President Bola Tinubu ordered security agencies to go after the killers, describing the latest wave of assault on the North-Central state as devastating.

“I have instructed security agencies to thoroughly investigate this crisis and identify those responsible for orchestrating these violent acts,” the president said in a statement by his spokesman Bayo Onanuga. “We cannot allow this devastation and the tit-for-tat attacks to continue. Enough is enough.”

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Presidency slams El-Rufai over plot to woo Buhari

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The Presidency and the ruling All Progressives Congress have dismissed the prospect of any opposition coalition unseating President Bola Tinubu in 2027, describing recent moves by former Vice President Atiku Abubakar and ex-Kaduna State Governor, Nasir El-Rufai, as futile and politically opportunistic.

Their reactions followed the high-profile visit by Atiku and El-Rufai—accompanied by former governors Aminu Tambuwal (Sokoto), Gabriel Suswam (Benue), Jibrilla Bindow (Adamawa), and Achike Udenwa (Imo)—to former President Muhammadu Buhari at his Kaduna residence last week.

Although Atiku maintained the visit was merely a post-Sallah courtesy call, political observers and members of the ruling party believe it was part of broader opposition coalition talks aimed at weakening Tinubu’s political base.

“There is a plan for the major political parties to come together and form a strong opposition. But it is not part of our visit,” Atiku told reporters.

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In recent weeks, concerns have risen within the APC over speculated coalition efforts and the potential exit of the Congress for Progressive Change bloc from the party, following defections to the Social Democratic Party.

But the APC’s National Secretary, Senator Ajibola Bashiru, waved off the speculations in a phone interview with The PUNCH, questioning the credibility of the so-called CPC defection narrative.

“It is not true. Which CPC bloc did you people say is leaving? Was El-Rufai or Atiku a CPC member? Is our Vice National Chairman (North-West), Garba Datti Mohammed, and even former Governor Al-Makura not in the CPC? Have you heard any of them saying he is leaving?” Bashiru queried. “I don’t know why the media keeps giving these sorts of people unnecessary attention.”

Also reacting, President Tinubu’s Special Adviser on Policy Communication, Daniel Bwala, criticised the coalition talks, dismissing them as a desperate power grab by political misfits with no shared ideology.

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“This coalition is an association to grab power,” Bwala said. “That’s why you will hear Peter Obi say they are only there to grab power. Tomorrow, he will say he is considering joining. As for my senior brother, El-Rufai, I like what he is doing. He is using them to play ping pong.”

Bwala added that internal resistance within the Peoples Democratic Party had already disrupted El-Rufai’s attempts to lure the opposition into the SDP.

“When El-Rufai came, he thought he would move all of them to SDP. But His Excellency (Sule Lamido) screamed, ‘Hold it there!’ He reminded them that it was the PDP that made El-Rufai minister twice and gave him political relevance. Now, he wants to drag them out? We’re not going anywhere,” Bwala recounted.

The Presidency insists that despite the rising political noise, President Tinubu remained focused on governance and would not be distracted by alliances it described as unstable and self-serving.

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Credit: PUNCH

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