France’s government fell apart on Wednesday when Prime Minister Michel Barnier was ousted by a no-confidence vote in Parliament, reviving a political crisis just as the country prepares to enter a new year.

After 331 out of 577 members of France’s National Assembly voted against him, Barnier is now expected to resign.

He had been appointed by President Emmanuel Macron in September after the inconclusive July parliamentary elections. This makes Barnier’s term the shortest for a prime minister in modern French history.

This situation has left the second-largest economy in the European Union with a caretaker government that might struggle to tackle a growing budget crisis, which is concerning for financial markets.

Here’s a quick overview of the current situation.

What’s Triggering This Crisis?

Issues began to surface when Barnier, a conservative, was assigned by Macron, a centrist, to lead a minority government following a failed attempt by Macron to call a snap election. This move aimed to curb the rise of right-wing political factions in France but resulted in a political deadlock. Barnier and Macron’s supporters were outnumbered in France’s Parliament, or National Assembly, by a coalition of left-wing and right-wing lawmakers led by Marine Le Pen.

“The choice we made was to protect the French,” Le Pen stated regarding the decision to proceed with the vote.

Both left and right parties expressed anger over Barnier’s proposals, which included tax hikes and budget cuts aimed at reducing France’s deficit. He invoked special powers to push through a welfare-related budget bill that lawmakers had not voted on. Barnier’s dismissal marks the first time a French prime minister has been removed since 1962, and his time in office has been notably brief since 1958.

What Comes Next?

No immediate snap elections will take place. France’s constitution prevents Macron from calling another election until this summer. However, he can engage in discussions with lawmakers from various political factions in order to select a new prime minister. When Macron previously appointed Barnier, he chose a seasoned politician who did not hail from the coalition that received the most votes – the leftist coalition led by Jean-Luc Melenchon.

Following the vote, Melenchon remarked that Barnier’s government downfall was “inevitable.” He added, “Even if there’s a Barnier every three months, Macron will not endure three years,” indicating skepticism about Macron’s remaining time in office.

The upcoming weeks and months may prove to be politically and economically turbulent for France.

Investors could react negatively to French stocks and bonds, potentially leading to ripple effects across other parts of the EU due to France’s substantial national public debt, estimated at around $3 trillion according to the French National Institute of Statistics and Economic Studies. However, government operations are not expected to cease completely, as Barnier is likely to remain in a caretaker capacity until a new prime minister is designated.

What’s Next for Macron’s Approval Rating?

Macron remains president until 2027, at which point his term concludes, unless he decides to resign – a step he has publicly stated he will not take. In France, the prime minister manages daily government functions, introduces legislation, and oversees its execution. The president is responsible for defense and foreign affairs, although there is some overlap in these duties.

Macron faces significant unpopularity in France. A successful Paris Olympics and the upcoming public reopening of the Notre-Dame cathedral, after it nearly burned down five years ago, have offered him some positive news. However, he finds himself in a complex position, trying to counteract the allure of far-right politicians who advocate for lower immigration, heightened security, and “common sense” economic measures that appeal to the lower and middle classes. At the same time, leftists are dissatisfied with his approaches towards the welfare state, perceived pro-business initiatives, and lack of support for Palestine, among various other issues. Analysts suggest that much of this crisis stems from Macron’s own decisions.

Jean-Yves Camus, a political scientist at the Paris-based French Institute for International and Strategic Affairs, characterized Barnier’s exit as “evidence that Macron’s gamble in calling a snap election last Spring was entirely misguided.”