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

Published

9 months ago

June 12, 2024

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.

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.

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.

“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.

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.

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.

News

More financial trouble for Nigerians as DStv, Gotv set to increase subscription fee

Published

31 minutes ago

February 24, 2025

Kayode Sanni-Arewa

By Kayode Sanni-Arewa

More financial trouble for Nigerians as DStv, Gotv set to increase subscription fee
MultiChoice, the company behind DStv, is preparing to raise the subscription fees for its Compact bouquet from ₦15,700 to ₦19,000.

This adjustment is expected to take effect soon, according to industry insiders

The increase comes nearly a year after the last price review.

The devaluation of the naira and rising energy costs have been identified as key reasons behind this change.

Many businesses in telecommunications, transport, and consumer goods have also raised prices in response to Nigeria’s economic conditions.

Other DStv packages will also be affected.

The Family and Access bouquets are expected to move from ₦9,300 to ₦11,000 and ₦5,100 to ₦6,000, respectively. Premium and Compact+ subscribers will also see new rates, though specific figures have yet to be confirmed.

Similarly, GOtv users will experience price changes.

GOtv Value subscribers will pay ₦3,900 instead of ₦3,600, while GOtv Plus customers will see an increase from ₦4,850 to ₦5,800.

Since 2023, economic policies such as fuel subsidy removal, currency devaluation, and electricity tariff hikes have caused the cost of goods and services to rise sharply.

Inflation in Nigeria reached 34.8% in December 2024, forcing many companies to adjust their prices multiple times last year.

Businesses across various sectors have reported heavy losses due to currency fluctuations, making price hikes a necessary measure for survival.

News

Just in: Tinubu, Party Leaders Reach Accord On Lagos Assembly Crisis

Published

2 hours ago

February 24, 2025

Kayode Sanni-Arewa

By Kayode Sanni-Arewa

After weeks of back and forth and in spite of a subsisting court case over the removal of Mudashiru Obasa as Speaker of the Lagos State House of Assembly, President Bola Tinubu and some leaders of All Progressives Congress (APC), weekend, reached a political solution considered a win-win for all parties.

Sources at the villa hinted that Tinubu had received many prominent party leaders, including former APC national chairman, Chief Bisi Akande; former governor of Ogun State, Olusegun Osoba; Minister of Solid Minerals, Mr. Dele Alake; and a former commissioner in Lagos State, whose name the source refused to disclose for political reasons.

Ahead of the meeting between the president and the party leaders, the source added that another prominent Nigerian and nonagenarian from the South-west (name withheld) had also met the president over the Assembly matter and other national concerns, during which he pleaded with the president to consider his request on Lagos as his birthday gift.

THISDAY gathered that the president met with different people on the Lagos Assembly matter, with each analysing the implications of letting the situation escalate beyond the point it was at the moment, even though some damage had been done. It was against this backdrop, the source said, that the meeting agreed that Obasa’s removal had come to stay and there was no going back on his speakership, especially as the laws guiding the Assembly were clear about the election and removal of a speaker.

Particularly more instructive was the revelation that virtually everyone, who had something to say on the Assembly crisis, spoke badly about the leadership of Obasa and his conduct for the period he held sway.

They argued, among other things, that if 37 out of his 39 colleagues stood against him with scathing remarks about his leadership, in addition to the position of the political leaders in the state, who also wrote him off, then returning him would be against the tide. They reckoned that would be dangerous for the politics in the state, and the democratic credentials of the president.

It was on the strength of these arguments that the president resolved at the meetings that Obasa’s removal had come to stay, but a plea was made to salvage his political future by giving him a soft-landing.

It was in the bid to give him a soft-landing, the source added, that a conclusion was reached during the meetings that Obasa’s removal should be quashed and commuted to resignation, the same way the removal of a former deputy speaker of the Assembly, Hon. Funmi Tejuosho, was converted to resignation.

Once that was settled, the fate of the current speaker, Hon. Mojisola Meranda, was next on the agenda and it was somewhat tricky for the president, the speaker being a woman.
The source explained that while the president wanted the elevation of a woman in the politics of the state, the speaker coming from the same senatorial district as the governor – Lagos Central, made it impossible for her to keep her position.

One of the reasons canvassed in support of that viewpoint was that, if the governor was elected from Lagos Central and his deputy from the East, then the largest senatorial district, Lagos West, could not be left out of the power equation on account of the leadership crisis in the Assembly.

The source disclosed that the president was so disturbed about the situation that he asked if another woman from Lagos West could be sourced and put forward, instead, so that the women folk would not allege discrimination in the power game.

Unfortunately, the only woman from that part of the state was not only a first timer, but also elected on the platform of a minority party, Labour Party, making her choice impracticable in view of the power arrangement in the state.
The meeting concluded that Meranda, too, should resign and stand down from the speakership position and allow someone from Lagos West to occupy the office, just so that none of the three senatorial districts would feel alienated.

Further explaining how the state arrived at this juncture, the source explained that contrary to insinuations in some quarters, the president did not care about Obasa’s removal, as he was not special.

The source said Tinubu’s response conveyed the impression that if Obasa was unable to manage and carry his colleagues along, to the point that he lost their trust, then the president would not do his job for him.
It added that there was also the feeling that Obasa had served as Speaker for over nine years by riding on the coattails of the president, and that was enough compensation, for now.

However, the source said the president was angry with the fact that Obasa’s removal caught him unaware. He was not just the political leader of the party in the state and at the national level, but also as the Commander-in-Chief of the armed forces. He considered being taken off guard in such situation discourteous, and having attendant political implications.

But after several interventions, the president, the source said, looked beyond the failings of the assembly members, and was now interested in moving forward. This disposition gave rise to the solutions collectively arrived at.

News

Canada: Immigration orders deportation of retired Nigerian police officer, wife

Published

2 hours ago

February 24, 2025

Kayode Sanni-Arewa

By Kayode Sanni-Arewa

Canadian immigration authorities have reportedly denied asylum to Wale Francis Akinpelu, a retired Nigerian police officer, and his wife, Ajarat Mojirola.

They were denied asylum due to concerns over his past service in the Nigerian police force.

The decision was based on allegations of human rights violations linked to the Nigerian police, which has faced accusations of corruption and misconduct.

The couple left Nigeria in 2017, claiming they were fleeing threats from a criminal gang.

Mrs. Akinpelu first traveled to the United States in May 2017, and her husband joined her in October after resigning from the police.

In 2018, they moved to Canada and applied for refugee protection, arguing that they were at risk of harm if they returned to Nigeria.

However, Canadian authorities questioned Mr. Akinpelu’s credibility due to his association with the Nigerian police.

His application was suspended, and later, a federal court upheld its rejection, ruling that his past employment disqualified him from asylum under human rights laws.

The couple’s applications were processed separately.

Mrs. Akinpelu’s request was initially denied in 2019 after authorities found inconsistencies in her claims.

She appealed the decision, leading to a new hearing, but her asylum application was rejected again in February 2023.

The court ruled that her evidence contained contradictions, and some documents appeared fraudulent.

In her legal challenge, she argued that the rejection process was unfair.

However, Justice Norris ruled against her, stating that her claims relied heavily on her husband’s statements, which lacked credibility.

The judge pointed out that she failed to provide substantial proof to support her fears of persecution.

With both asylum requests denied, Canadian authorities are set to proceed with the deportation process for the couple.