By Dominique Vidalon and Sudip Kar-Gupta
PARIS (Reuters) - French Prime Minister Michel Barnier on Monday made another major concession to Marine Le Pen's far-right National Rally party, dropping planned cuts to medication reimbursements in a last-minute bid to get his 2025 budget bill over the line.
Barnier and Le Pen spoke on Monday, his office said in a statement, ahead of a crunch parliamentary vote later in the afternoon that the RN and the left had been warning they could use to topple his administration.
It is the second time Barnier has given in to RN demands after he scrapped an electricity price hike worth some 3 billion euros last week. French stocks rose on the news, while the yield on France's 10-year bond dipped.
Barnier's struggles to get the 2025 budget through a deeply divided parliament threaten to plunge the euro zone's second-biggest economy into its second political crisis in six months, underlining the instability that has taken hold in capitals across the EU.
Ever since its constitution in September, Barnier's minority government has relied on RN support for its survival. The budget bill, which seeks to rein in France's spiraling public deficit through 60 billion euros ($63 billion) in tax hikes and spending cuts, may snap that tenuous link.
On Monday afternoon, parliamentarians are due to vote on a key component of the budget, the social security financing bill. Last week's concession to scrap electricity hikes was welcomed by the RN, but the party said Barnier had to go further. It remains to be seen if the latest concession will be enough to win RN support in the upcoming vote.
Without the necessary votes to pass the social security bill, Barnier may invoke article 49.3 of the constitution, which would enable him to get the measure adopted without a vote.
It also triggers a no-confidence motion, however, that the RN and the left could use to topple his government as soon as Wednesday. No French government has been forced out by such a vote since 1962.
Alternatively, Barnier could choose to roll the dice and let the vote go ahead. If the bill is rejected, it would go back to the Senate for more alterations. However, parties can also table a no-confidence vote even if Barnier avoids the 49.3 this time.
POLITICAL PUZZLE
The budget bill has proven to be kryptonite for Barnier, who must please truculent lawmakers in a fragmented parliament, while also keep onside nervous investors with plans to cut the deficit to 5% of economic output in 2025 from over 6% this year.
Le Pen also wants Barnier to raise pensions in line with inflation, freeze gas tax hikes and lower France's EU contributions.
A move to bring down the government would not be without risks for the RN, which has moved from the fringes to the mainstream in recent years and is eager to show it is a government in waiting.
Le Pen has rejected claims by rivals that the RN are the "artisans of chaos," and party leader Jordan Bardella on Monday said voting for a no-confidence motion was "a way of protecting the country from an economic storm."
Gabriel Attal, Barnier's predecessor as prime minister and now head of Macron's lawmakers in the National Assembly, urged the RN and the left to back-away from the no-confidence motion.
"We solemnly call on the opposition not to give in to the temptation of the worst, to renounce their disastrous project," he wrote on X.
"Instability is a slow poison, which will gradually attack our economic attractiveness, our financial credibility, and the confidence, already undermined, that the French have in their institutions."