Morning Update

Markets are continuing to monitor developments in France closely, as concerns over the country’s political and economic climate worsen.

It looks likely that France’s newly appointed PM, Michel Barnier may face a vote of no confidence this week, as pressure mounts from Marine Le Pen to yield to National Rally’s fiscal demands.

With France’s fiscal position under ever more scrutiny and yields on government bonds climbing, Barnier telegraphed fiscal tightening measures comprised of €40bn in spending cuts and €20bn in tax hikes.

The veteran politician signalled that this was vital in bringing down debt and restoring confidence in the markets, but some of the measures announced constitute a ‘Red line’ for National Rally.

Under Macron, France’s debt has risen from around 100% of GDP to as high as 117%, before stabilising at around 110.6%.

France budget deficit also stands at around 5% of GDP – the second highest in the Eurozone and over three times that of Germany – with many therefore arguing that Paris should look towards fiscal tightening to shore up their financial position. Under existing conditions, it is expected to rise to 6.1% over the course to the year.

However, with Barnier’s power held together only slimly, threats of a vote of no confidence represent a major threat to the PM, and could put France into a greater level of uncertainty with everything why a General Election brings.

Developments in Syria have caught the attention of the world’s press this weekend with Rebel Groups taking ground form Assad’s government forces.

Led by the group Hayat Tahrir al-Sham (HTS), a coalition of rebel forces have launched a major offensive such that they have now expanded their control past the province of Idlib. (HTS being established in 2011 as an affiliate of Al Qaeda).

The coalition is now understood to have control over most of Aleppo, Syria’s second city which represented a key government stronghold. Aleppo had also been under government control since the start of the civil war.

The rebel coalition is also believed to have captured material form Assad’s regime including helicopters and weaponry.

Given Moscow’s support of Assad, Russia have launched a series to Airstrikes on the Rebel groups.

Georgia was marked by further turmoil this weekend with the country in crisis over its direction of travel vis-a-vis the European Union.

This latest turmoil comes as the pro-Russian government announced that they would halt EU accession talks until 2028.

With the commitment to pursuing EU accession codified in Georgia’s constitution, the news that the ruling Georgia Dream party is reneging on this commitment has sparked unrest in the nation’s capital.

Thousands of protesters have gathered in Tbilisi over the last four days, with police forces using tear gas and rubber pellets against them.

Protesters are also demonstrating at the increasingly authoritarian, anti-western and pro-Russian policies that Georgia Dream have been pushing.

The latest disruptions came just hours after the EU parliament passed a resolution detailing how the Georgian elections were not free.

October’s election which was claimed by the pro-Russian Georgian Dream party having claimed 53.9% of the vote (a result which was markedly different from exit polls administered by Western pollsters).

The party – which has been in power for 12 years – has been described as a “culturally conservative illiberal Eurosceptic party” that has sought to firm up ties with Russia.

The party’s de facto leader is the oligarch Bidzina Ivanishvili whose opaque wealth is estimated to be equivalent to 25% of Gerogia’s GDP.

Pro-Western parties rejected the outcome of the election, maintaining that there were unprecedented levels of Russian interference.

Georgia’s pro-western president, Salome Zourabichvili, also expressed grave concerns around the legitimacy of the parliamentary elections, and has expressed concern over halting EU accession talks. Over the weekend, the president said that Georgia was slipping into a “quasi-Russian” state and renewed calls for fresh parliamentary elections.

With Brussels signalling severe concerns over the direction of travel that Georgia Dream is taking the country, the EU’s high representative for foreign affairs warned over the Bloc’s “serious concerns about the continuous democratic backsliding of the country”. Brussels also urged the Georgian government to “respect the right to freedom of assembly and freedom of expression, and refrain from using force against peaceful protesters, politicians and media representatives.”