French Prime Minister Francois Bayrou on Monday launched consultations with political parties in a last-ditch effort to keep his job ahead of a no-confidence vote he is on track to lose on September 8.
Mr Bayrou responded to comments made by political leaders at the weekend that appeared to sweep away any chance of their support.
Appearing confident of his chances of political survival, he said he was "absolutely convinced that things can change" in an interview with French news channels.
Consultations were set to start on Monday afternoon with a meeting with the Communist party and leaders of other political groups throughout the week. Two left-wing parties have declined the invitation – France Unbowed and the Greens.
France has veered into an acute political crisis since Mr Bayrou called the no-confidence vote in an effort to break a deadlock over planned budget cuts. His downfall would heighten doubt over whether any French government can rein in the largest budget deficit in the eurozone.
Opposition leaders including Jordan Bardella, president of the far-right National Rally, and Socialist leader Olivier Faure, reaffirmed they will vote against the no-confidence motion, saying they planned to participate in the meetings called by Mr Bayrou only out of courtesy.
The Socialists’ decision to vote against the motion is “irrevocable”, Mr Faure said on BFM television. “The only word I’m waiting for him to say now is ‘goodbye,’” he added.
Politicians have expressed surprise and at times anger at these last-minute negotiations, rejecting accusations by Mr Bayrou that "they were all on holiday". Most people in France take several weeks of annual leave in July or August.
National Rally politician Marine Le Pen accused Mr Bayrou of lying, saying she had sent him a letter about the budget in late July that he had failed to answer.
Christine Lagarde, President of the European Central Bank (ECB) and former French economy and finance minister, told Radio Classique that "all the risks of a fall of government in all the countries of the eurozone are worrying".
"What I have been able to observe over the past six years [at the head of the ECB] is that political developments, the occurrence of political risks, have a clear impact on the economy, on the financial markets' assessment of country risks, and are therefore worrying for us," she said.
Market sell-offs over the past week pushed the difference between France and Germany’s 10-year borrowing cost to more than 80 basis points – levels last seen in January.
In July, Mr Bayrou put forward €44 billion ($51 billion) in spending cuts and tax increases, which he argued were essential to bringing down the budget deficit to 4.6 per cent of economic output from an expected 5.4 per cent this year. Investors have positioned themselves for heightened political risk in France, which threatens to derail a nascent economic recovery as companies delay hiring and investment.
With labour strikes planned for this month, Mr Bayrou’s departure would lead to the return of problems President Emmanuel Macron has struggled to solve since snap elections last year left France with a hung parliament as it wrestles with the deficit.
Some opposition parties are pressing Mr Macron to roll the dice with new legislative elections, or even an early presidential vote. Mr Macron, however, has thrown his weight behind Mr Bayrou’s plans and insisted he will not resign before his term ends in 2027.
