Spendthrift European governments are suddenly running smack into a fiscal wall of their devising and are flailing madly.

It's budget time, with a touch of panic for those in power from Frankfurt to London and darn near everywhere in between.

Contentious budget plans are wreaking political havoc across Europe

• It seems that the ramifications of a perceived “bad budget” are causing political casualties in a way that Europe will need to come to terms with for the foreseeable future.
• In the euro zone, post-pandemic fiscal rules are putting pressure on even the most hawkish EU members.

I've written quite a few pieces on the self-inflicted pain that is the German economy, so you all know the score there right now. Headed for a special election in February thanks to a scheduled 'no-confidence' vote next month that Chancellor Olaf Scholz is widely expected to lose, the German upheaval is primarily a result of arrogant insistence on an unhindered march to unready, unreliable renewable energy sources. It has literally crippled their economy by burying the government, households and industries under unsustainable levels of debt.

There have also been questionable fiscal moves on the part of Scholz, who never had a rock-solid ruling coalition to begin with, being the slightly larger part of a triumvirate of disparate parts. His latest lame-duck move in the middle of a money crunch and an already collapsed agreement between the parties smacks of our current vegetable-in-chief blithely writing checks willy-nilly on his way out the door. 

...Over in Berlin, Chancellor Olaf Scholz made a surprise visit to Kyiv on Monday, pledging an arms deal worth 650 million euros with Ukrainian President Volodymyr Zelenskyy. The move raised eyebrows back in Germany, as the government’s aid to Ukraine was central to the disagreements within the coalition.

The collapse of this government could have longer term ramifications for Germany’s fiscal rules, with opposition leader Friedrich Merz saying he would consider reviewing the once-sacred borrowing rules.  

 At this very moment, a once mighty German automotive segment, sinking under the weight of imposed electric vehicle mandates, is begging for relief from artificially imposed quotas. Numbers for which customers do not exist while trying to reason with extraordinarily well-compensated employees in the middle of work actions against them thanks to the lay-offs and proposed plant closures the dearth of sales have necessitated.

Andrew Neil warned that net zero targets could spell disaster for the auto sector as workers protest factory closures in Germany.

In a post on X shared on December 2, Neil wrote: "Workers at Volkswagen factories across Germany striking after the manufacturer said it would have to close plants amid falling demand and a slower-than-expected transition to electric vehicles.

"European governments’ obsession with net zero is a death wish on the automotive industry," he added.

Thousands of Volkswagen workers in the country staged industrial action on Monday after the company announced plans to shutter three plants and cut pensions, DW reports.

This week's truly spectacular fireworks promise to be in Paris, and they won't be over Notre Dame's first mass as the cathedral reopens.

France is in financial meltdown and everyone's eyes are on the tiny little president - does he stay or does he go?

It looks like the forces arrayed against Macron's budget will already be able to claim one scalp by the end of *checks notes* TODAY - Prime Minister Michel Barnier. Marine LePen has said her party will join the far-left in voting against Barnier and Macron.

France is in shambles. Macron’s government is expected to collapse today. pic.twitter.com/xmnmkEkhOD

— Ian Miles Cheong (@stillgray) December 4, 2024

I'm sure there's no payback for the elections this past spring here...

French Government Set to Be Toppled in No-Confidence Vote

France looked set for more political turmoil after both the far-right National Rally and the leftist Socialists said they would vote to bring down the government.

National Rally President Jordan Bardella said in a radio interview Wednesday that his party would back a no-confidence motion scheduled for later this afternoon. Boris Vallaud, the head of the Socialists in the National Assembly, said separately on television that he, too, would support it. Those comments seemed to cement the end of Michel Barnier’s short term as prime minister, despite an appeal late on Tuesday from President Emmanuel Macron for lawmakers to support the government.

France has been in a political limbo since Macron called a snap national vote in June after getting trounced in European elections. That left the lower house split into three fiercely opposed blocs: a diminished center supporting the president, a leftist alliance and a strengthened far right led by Marine Le Pen, whose National Rally is now the biggest party in parliament. Her supporters, together with those backing the Socialists, have enough lawmakers to bring down the government led by Barnier, who was appointed prime minister in September with a core mission to get France’s messy finances in order.

Barnier used a constitutional legal tweak to get his budget (with tax increases and spending cuts) through the door, precipitating the current brouhaha. In doing so, Barnier was giving LePen the opening to go after Macron since, as part of the trade-off written into the rules for 'the mechanism,' a no-confidence vote can be called afterward.

...Barnier used a constitutional mechanism on Monday to force through an unpopular budget bill, leading the National Rally and the leftist coalition to call for the votes of no confidence. Le Pen moved forward with the motion even after Barnier submitted to nearly all of the National Rally’s demands to change the budget legislation.

If the government collapses on Wednesday, it would underscore the power acquired by Le Pen since Macron called the surprise election in June. It would also mark the shortest tenure for a premier since France’s Fifth Republic was founded in 1958.

The only question was whether LePen would take the shot, and it turned out that she was up for it.

Macron was in Riyadh Tuesday and chastised LePen for using the budget turmoil to further her 'political ambitions' instead of being helpful. 

HOW DARE SHE

No matter what happens this afternoon, Macron would have to resign - they can't force him out. He's president until May 2027 and the next round of presidential elections unless he voluntarily leaves. So far, he insists he's not going anywhere.

As this impasse hung in the balance, French bonds were already reaching lows comparable with those of the Greeks...and WOOF. That's bad news.

The growing sense of crisis over France’s budget is driving the country toward a moment of humiliation in financial markets: It seems only a matter of time before investors declare France a worse credit risk than Greece.

Even if a budget is adopted, the outlook for French economic growth next year is so subdued that the slightest shock could send it and revenues tumbling. 

...The OECD expects France’s economy to expand just 0.9% in 2025 and 1% in 2026. It warned that even if the budget was adopted, additional measures would be “vital to reduce government debt significantly.” It also highlighted that “weaker-than-expected inflation and economic growth could reduce tax revenues, threatening the government’s ability to meet” deficit targets.

Should nothing be done, this no-confidence vote passes, and a caretaker government has to hold the fort without a budget using emergency powers to spend only money on hand?

No one's seen that before. It'd all be guesswork starting this afternoon.

A historically unpopular British Labour government is adding to the angst on their side of the pond, as well. Besides stripping the elderly of their tiny winter heating subsidy, business confidence stands at COVID lows thanks to 'tax raids,' the latest among the new government's long list of sins.

Raymond Sutcliffe is fuming. ‘I didn’t know Rachel Reeves had been in here as a customer,’ says the 61-year-old greengrocer, who owns one of the oldest shops in the Chancellor’s constituency in Leeds. ‘If I had, I’d have barred her.’

His ire is aimed at her controversial Budget decision to slash business rates relief – which means the bill for businesses like his will more than double next year.

It comes on top of big increases in employers’ National Insurance contributions and the national minimum wage.

‘They are going to put us out of business, the way they are going on,’ a rueful Sutcliffe adds of Labour. ‘I don’t mind paying anyone a decent wage, but how is a small business going to survive all these changes at once?’

Sutcliffe, who employs family members including his son Richard, 26, in his century-old shop, went on: ‘I’m glad I’m not starting out. Do they want empty high streets? That’s where they’re heading.’

I haven't checked the petition to force the Prime Minister to call a vote in a while...woo, sheesh! About 50K short of three million people have signed it.

I am ever so thankful we managed to pull ourselves up and out before the entire country was so sunk in the malaise of progressive-socialist policies that it wasn't possible to claw free. I'm not sure how successful many of these reform efforts will be thanks to the wheeling and dealing -  witness LePen's almost victory last spring in France and what AfD, with potential banning, is facing in Germany - inherent in a Parliamentary system.

To American eyes, it all seems distinctly undemocratic, but that's their system, and Lord knows ours has its issues as well.

However, the old European fiscal houses are in turmoil, with economies in the doldrums that cannot give them any relief. They're going to have to eat some crow and hardtack.

I am grateful that with our enormous challenges ahead, it's nowhere near as bleak. 

We are ascendant - we feel it in our bones. 

We can reach for that brass ring again.

BEEGE UPDATE: Apparently, it's farewell and adieu to Monsieur Barnier and the French government as a whole.

🚨🇫🇷 French Government Collapses

Turns out people don’t like their Politician’s betraying their Country at the behest of Corporate WEF Sponsored Globalists ‼️

Now how do we do the same? pic.twitter.com/QVmK0qgY67

— Concerned Citizen (@BGatesIsaPyscho) December 4, 2024

And nobody wants the job.

There can be no new parliamentary elections until next summer -- so now Macron has to seek another new PM. Barnier was already difficult to find. Snap legislative elections resulted in a hung parliament last July and this is uncharted territory for France.

— Rosie Birchard (@RosieBirchard) December 4, 2024

What happens next?

Um...don't know.

And neither do they.