France's budget talks crumble, raising doubts about government's survival

By Michel Rose and Makini Brice

PARIS (Reuters) -French budget talks teetered on the brink of collapse on Wednesday, a day after Socialist party officials suspended their participation in protest over remarks about immigration by Prime Minister Francois Bayrou, threatening his government's survival.

The flare-up over the comments by Bayrou, who said many French people felt "submerged" by immigration, underlines the complexity of his political balancing act.

His comments were cheered by far-right lawmakers from the National Rally, the largest single party in parliament, but prompted the Socialists to abandon budget talks, threatening the passage of the bill and raising fresh doubts about the stability of Bayrou's administration.

The Socialists' walkout comes at a crucial moment, with the 2025 budget bill entering its final stage. On Thursday, a small panel of senators and parliamentarians is due to thrash out a final text before it heads to the lower house floor on Monday.

There was little sign that they could be lured back to the negotiating table by Wednesday night, with Bayrou unwilling to retract his comments. He sent a junior minister in his place to answer questions from senators, to whom he defended the prime minister's comments. "We cannot ignore what our fellow citizens feel and express," Patrick Mignola told senators.

Patrick Kanner, the leader of the Socialists in the Senate, said the government response was inadequate.

"I am disappointed by his response... he could have gone further," Kanner said on BFM TV after comments by Bayrou were read out in the upper house. "Talks remain blocked for now."

Philippe Brun, a Socialist lawmaker involved in the budget talks, said earlier on Wednesday that the Socialists could return to the table if Bayrou withdrew his immigration remark. He said they also wanted a minimum wage increase and more investment in the green transition, among other things.

Arthur Delaporte, another Socialist lawmaker, told Reuters that the need to pass a budget meant that the door for talks would likely remain open.

"We do not compromise with the Republic," he said. "I think the pressure we have with the possibility of a no-confidence motion is enough to make progress on budgetary issues."

MOUNTING PRESSURE ON BUDGET

Failure to pass the 2025 budget has already rattled investors while sapping business and household confidence. The government has had to make billions of euros in concessions to forge a bill with a chance of getting passed.

Without a majority, the government may use constitutional powers to bypass lawmakers, which would likely cause opposition lawmakers to trigger a vote of no-confidence.

The government had been counting on the Socialists abstaining to survive a potential no-confidence vote, and had already retreated on numerous spending cuts to win them over.

Bayrou was named prime minister in December and is seeking to avoid the fate of his predecessor Michel Barnier. Politicians from the left and right banded together to topple Barnier's government when he tried to pass a budget that lawmakers said went too far in a bid to cut spending.

While Barnier had sought support from the National Rally, Bayrou has attempted to survive with the backing of the Socialists. He has agreed to reopen talks on pension reform, a key initiative of President Emmanuel Macron, and scrapped plans by his predecessor to cut thousands of teachers' jobs.

So far, Bayrou has survived one no-confidence vote after the Socialist party did not support it.

(Reporting by Makini Brice, Michel Rose and Elizabeth Pineau; additional reporting by Leigh Thomas, Michel Rose and Alun John in London; Editing by Ros Russell)