New cabinet questioned: Will the new Prime Minister of France ultimately escape the fate of his predecessor?

French Prime Minister Franois Beru has pledged to reduce the country's deficit significantly to close to 5% of GDP, a plan that could reproduce the deadlock that led to the previous government's downfall. Beru introduced his new cabinet on Monday and is set to present a new policy agenda to parliament on January 14 next year, committing to draft the 2025 budget by mid-February. The divided National Assembly means the new government, mainly comprised of centrists, will need to appease opposition MPs from various political factions. However, there are preliminary signs that major parties are not satisfied with the composition of the new government and may once again propose a motion of no confidence. President of the far-right National Rally party, Jordan Bardella, called the new government a "failed alliance." Left-wing Socialist Party leader Olivier Faure described the formation of the new government as a "provocation." Since President Macron dissolved the National Assembly in June and called for early elections, France has been in political turmoil. The election results show that the lower house is roughly divided into three competing groups: the left-wing New People's Front coalition, Marine Le Pen's far-right National Rally, and a small group of centrists supporting the president. In early December, the first two coalitions joined forces to force Prime Minister Michel Barnier to step down. EU rules dictate that member states' debt must not exceed 60% of GDP, and the deficit must not exceed 3%, but France has long failed to adhere to these regulations. Therefore, next year's budget needs to reduce France's current deficit, which has surged to 6.1% of economic output. Antonio Barroso, Eleonora Mavroeidi, and Jamie Rush of Bloomberg Economics stated, "The divisions that paralyzed the budget process are still there, and breaking the political deadlock appears to be a long way off. All of this could add pressure to an already sluggish economy." Seeking support for the 2025 budget - Beru's most urgent task - will be challenging in the National Assembly, as Macron's legislators are in the minority and the opposition forces have shown little willingness to compromise. As France has not yet enacted its budget law for 2025, the country will rely on emergency legislation enacted last Saturday, allowing only essential spending, starting in January. In recent months, France's political and budgetary challenges have led to a sell-off of the country's debt, raising its borrowing costs relative to other European countries. The spread between French and German 10-year government bond yields closed at 81 basis points on Monday, the highest level since December 4. Beru has assembled a new cabinet composed of heavyweights and seasoned professionals, attempting to implement the emergency budget austerity policies that led to his predecessor's ouster. The new prime minister has brought back two former prime ministers to government and appointed seasoned investment expert Eric Lombard, who has connections to the left-wing, as the finance minister. While the deficit targets may be similar, Beru stated that the impact of his government's budget, especially on businesses, will be different. Beru said, "I support protecting businesses. I'm not saying we cannot make short-term efforts, but I believe everyone needs to know where our national treasure is. Our national treasure is companies. They create wealth. They create jobs." Lombard also expressed a slight change in his view on the budget compared to the 600 billion tax and spending cut plan proposed by Barnier - a significant departure for France. Lombard said at the handover ceremony at the Finance Ministry on Monday, "We must reduce the deficit without killing growth. We must seek this balance, and that is the meaning of the 2025 budget." Franois Villeroy de Galhau, the governor of the French central bank, said last Thursday that for credibility to be maintained, France must achieve a significant improvement to reduce next year's deficit to close to 5% instead of 6%. He said, "We are facing the risk of gradual descent as our influence declines in Europe and the world, and we are losing room for maneuver." Earlier this month, Moody's unexpectedly downgraded France's credit rating and warned that the country's finances would deteriorate in the coming years, with a low likelihood that the next government could sustainably reduce the size of the deficit beyond next year. Beru is relying on Lombard's experience to help achieve the 2025 budget. The new prime minister said on Monday, "He has had a long career in business, insurance, and banking, and I think he has the respect of everyone." At 66 years old, Lombard has a wealth of experience in the financial sector, most recently serving as CEO of Caisse des Depots Group, a 200-year-old financial institution. The institution aims to serve the public interest by combining asset management, social housing financing, and national strategic asset management. Prior to this role, Lombard spent most of his career in the financial sector, working at Crdit Lyonnais and AXA Insurance in France. In the early 1990s, he briefly served as an advisor to Socialist Finance Minister Michel Sapin, who later returned to the same position during Franois Hollande's presidency from 2012 to 2017. However, his biggest obstacle will be finding a compromise among opposition MPs. Green Party leader Marine Tondelier said on Monday that the new government is "unbalanced" and gives too much influence to the right-wing. She said, "The same reasons will lead to the same results, Beru and Barnier are on the same path, and he is unlikely to have a different fate." Faure's Socialist Party may play a decisive role in a vote of no confidence, and he stated on Tuesday that all conditions required to reach a "non-blame" agreement with the new government are not in place yet, but he will wait until the policy speech on January 14 to decide on their course of action.