04/04/2023 Strikes and France are two words that go hand in hand, with images
of protesting workers marching through burning boulevards settling happily alongside those
of shrugging old Frenchmen gently arguing over a game of pétanque in a Provençal village on
a warm summer evening. But the 1.28 million people who took to the streets across France on
the 7th March constituted one of the been
largest
protests in almost thirty years: 
The chart above shows that pension reform has often
been a lightning rod for public discontent but this time there is an added twist. President
Macron had to activate a political nuclear button to pass the reforms, using a
constitutional weapon known as Article 49.3 which bypasses Parliament altogether. After he
took this decision on 16th March, the protests have increased. They have widened
to include walk-outs in public transport, schools, energy plants and refineries. Rubbish has
piled up on the streets of Paris
after
a three week strike by refuse collectors. Why did he
activate Article 49.3? Macron
introduced
a bill in January to raise the retirement age from 62 to 64
and extend the period of contributions to receive a full pension. He had tried to enact this
in his first term but Covid put paid to his attempts. He knew bringing it back would be
difficult, not least because he faced even worse parliamentary arithmetic following the
constellation of parties in the National Assembly after last year’s elections. Parties on
both the far left and right gained ground, with quasi-Communist Jean-Luc Melenchon’s “France
Unbowed” gaining 52 seats and far right-wing Marine Le Pen’s “National Rally” adding 81
seats. With Macron’s party shedding a calamitous 105 seats, he found himself without a
majority in Parliament. But Macron only created his party in 2016 and it has already
undergone several name changes since then. As the ultimate shape-shifter, he was hoping that
he could convince other centrist parties to vote with him, or at least ensure the opposition
were so divided that they would not unite against him. His Prime Minister, Elisabeth Borne,
made
concessions
to the centre-right Les Republicains in which she believed
she had gained their support for the package. But on the day of the vote, a rebel faction
emerged
in their group of 61 MPs, and the government could not be sure of their support. The numbers
just wouldn’t add up. The Prime Minister had to
announce
in the face of jeering and chanting opposition MPs that “Today,
we are faced with uncertainty that hinges on a few votes. We cannot take the risk of 175
hours of parliamentary debates collapsing”. Triggering Article 49.3 isn’t the end of
the matter. It then gives opposition MPs 24 hours to table a no-confidence motion and then,
48 hours later, to debate and conduct the vote. With the Prime Minister triggering the
article on Thursday 16th March this left France in a state of “
ungovernance” over the weekend as the opposition prepared their counter-attack. On
Monday 20th March, the government narrowly
survived
the No Confidence motion by just nine votes. That was tighter
than expected, with more defections from the centre-right Les Republicains than Macron would
have hoped. This leaves the government in a perilous position. The President cannot get his
agenda through Parliament. Even if he replaced his Prime Minister it’s not clear how that
would help the painful arithmetic he faces in the National Assembly. The pensions reform
isn’t even law yet as it must clear its final hurdle, France’s Constitutional Council. The
judges
will
rule
on 14th April whether the legislation is in line with
the constitution and – at the demand of politicians on both the far left and far right –
whether a referendum on the reform is admissible. Although a referendum would require the
signatures of a tenth of the electorate (about 5 million people) it is possible to see a
path where momentum builds against Macron from French voters. His approval rating has
already worsened since the reforms were introduced: 
The President gave a
TV
interview
on 22nd March to put his case for reform to the
country and explain the constitutional manoeuvre but a
survived
said 61%
of those watching felt his words would lead to more public anger. Nearly three-quarters of
those surveyed do not trust his government to carry out the country’s major projects. France
is already on fire even as Macron burns through his political capital. The future of his
government depends on the whim of a handful of MPs and the ruling of the Constitutional
Court. This will not be the last battle in a bloody war for the future of the country.
France might be unbowed but it is ungoverned too. The political risk premium on French
assets should remain high for some time to come. 
Helen Thomas
CEO of BlondeMoney
Group