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Macron Names State Lender CDC’s Lombard Finance Minister
(Bloomberg) -- President Emmanuel Macron appointed Eric Lombard as France’s finance minister, tapping an experienced finance professional as part of a new cabinet that also returned two former prime ministers to government.
Lombard, who currently heads the Caisse des Depots Group — a two-century old financial institution that answers to parliament — is tasked with urgently repairing the country’s finances after the collapse of the previous administration in a battle over next year’s budget.
The incoming minister will be a key part of French premier Francois Bayrou’s new government that will aim to quickly pass a 2025 budget and survive any no-confidence motions tabled by the opposition.
Finding support for the legislation will be difficult in the National Assembly, where Macron’s lawmakers are in the minority and opposition forces have shown little desire for compromise.
France has been in political turmoil since June, when Macron dissolved the National Assembly and called elections. The ballot returned a lower house split among three feuding blocs: the leftist New Popular Front alliance, Marine Le Pen’s far-right party and centrists that largely support the president.
The previous government fell over a budget dispute after the French far right and left joined forces to topple Michel Barnier’s government.
Still, Macron reappointed several of Barnier’s team, including Bruno Retailleau as interior minister and Jean-Noel Barrot for foreign affairs. The president also brought in two former prime ministers with Elisabeth Borne returning with the education portfolio and Manuel Valls as minister for overseas territories.
France’s finances are in disarray after Marine Le Pen’s nationalist lawmakers joined with leftists and greens in the National Assembly to oust Bayrou’s predecessor, leaving the country without a budget. From January, the state will be reliant on emergency legislation promulgated on Saturday and decrees that permit only vital spending and unchanged taxation.
France’s political and budget difficulties have sparked selloffs in the country’s debt in recent months, driving up the country’s borrowing costs compared to European peers. Bayrou has said he aims to finalize the budget by mid-February.
“This situation is exceptional and grave, its numerous effects will be visible and tangible in every sector in France,” outgoing Finance and Economy Minister Antoine Armand told a committee of lawmakers.
To deliver on any new investment or spending pledges, Lombard must quickly navigate a fractured National Assembly without a majority of lawmakers backing the government. That proved too much for Barnier when opposition parties balked at €60 billion ($62.9 billion) of tax increases and spending cuts he proposed in a stringent plan to rein in the runaway deficit.
Bayrou said on Thursday he aims to deliver a new full-year budget by mid-February after consultations with different groups on how they consider the state should be financed. He will lay out his policy agenda in a speech to the National Assembly Jan. 14 after a first meeting of the new cabinet Jan. 3.
Lombard has been chief executive of the Caisse des Depots Group since 2017 and was re-appointed by Macron for a second five year mandate in early 2023. The institution is designed to serve public interests, combining asset management, financing of social housing and management of the state’s strategic holdings.
Lombard, 66, has spent most of his career in the financial sector, with stints at BNP Paribas and Generali France. In the early 1990s, he briefly served as an advisor to Socialist Finance Minister Michel Sapin, who himself returned to the same post during Francois Hollande’s presidency 2012 to 2017.
Lombard has argued that France’s fundamental economic challenges stem from too-high real interest rates that favor the wealthy and make it hard to reduce inequality and finance the climate transition.
“We are pleased that income inequality is better managed in France than elsewhere, but wealth inequality is abyssal,” he said at an economics conference in Aix en Provence in July.
Bayrou is counting on Lombard’s credentials in helping get the 2025 budget over the line.
“He’s someone who’s had a very long career in business, insurance and banking, and is respected, I think, by everyone,” the premier said in an interview on BFMTV late Monday.
Success for Lombard will depend for a large part on Bayrou’s political agility in ensuring some opponents at least agree not to censure the government. The 73-year-old premier, who has cordial relations with both the center-left, the right and even Le Pen’s far-right, has said he aims for “reconciliation.”
So far, the Bayrou’s efforts have done little to assure French voters. According to a poll by Ifop for Le Journal du Dimanche, 66% are unhappy with the new premier — the worst performance on record for a prime minister.
After Bayrou’s nomination, Le Pen and some members of the NPF said they would not censure the government outright, so long a there are changes in policy.
Initial reactions from opposition figures however point to potential trouble for the French premier.
Shortly after the new cabinet announcement National Rally President Jordan Bardella tweeted on X that Bayrou had “put together a coalition of failure.”
Senior members of the left were also unimpressed by Bayrou’s cabinet, with Socialist Party leader Olivier Faure saying on X that the new team is a “provocation.” Ecologist party leader Marine Tondelier said the outcome is “imbalanced” with too much influence given to the right.
“The same causes will have the same effects and Bayrou is following the same path as Barnier and it’s unlikely he doesn’t share the same destiny,” she said on BFM TV.
Lombard will have little to give by way of concessions on the budget given the scale of the challenge to reduce a deficit that has swollen to around 6.1% of economic output this year instead of narrowing to the 4.4% initially targeted.
Barnier’s plan aimed to bring the gap to 5%, an unusually sharp reduction by historical standards for France.
Bank of France Governor Francois Villeroy de Galhau said on Thursday that to remain credible France must still deliver a significant improvement that brings the deficit closer to 5% next year than 6%.
“We are at risk of gradually sinking as little by little we lose weight in Europe and the world and we lose our margin for maneuver,” he said on France 5 television.
--With assistance from Benoit Berthelot.
(Adds details on cabinet appointments starting 2nd and 6th paragraph)