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Bayrou becomes Macron's fourth prime minister in 2024

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Socialists rule themselves out of government

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Bayrou faces tough challenge to steer 2025 budget through

parliament

(Recasts with Socialists' reaction)

By Dominique Vidalon and Tassilo Hummel

PARIS, Dec 13 (Reuters) - French President Emmanuel

Macron named key ally Francois Bayrou as his fourth prime

minister of 2024 on Friday, but the scale of the challenge

facing the veteran centrist was immediately clear as the

Socialist Party refused to join his coalition government.

Bayrou, 73, gave a sober assessment of whether he could tame

a hung parliament that ousted his predecessor, Michel Barnier,

just last week.

"It is a long road, everyone knows that," he told reporters.

"I am not the first to take a long road."

France's festering political malaise has raised doubts

about whether Macron will complete his second presidential term

until 2027.

It has also lifted French borrowing costs and left a power

vacuum in the heart of Europe, just as Donald Trump heads to the

White House and Germany braces for new elections following the

collapse of its governing coalition.

Bayrou, the founder of the Democratic Movement (MoDem) party

which has been a part of Macron's ruling alliance since 2017,

has himself run for president three times, leaning on his rural

roots as the longtime mayor of the southwestern town of Pau.

His immediate priority will be passing a special law to roll

over the 2024 budget, with a nastier battle over the

belt-tightening 2025 legislation looming early next year.

Parliamentary pushback over the 2025 bill led to Barnier's

downfall and left-wing leaders on Friday announced they might

try to topple Bayrou as well should he use special

constitutional powers to ram through the budget against

parliament.

Bayrou's proximity to the deeply unpopular Macron may also

prove to be a vulnerability.

The Socialist Party, which Macron courted during his prime

ministerial search, accused the president of ignoring their

demands for a leftist leader in favour of a "risky" Macronista.

"We will thus not enter the government and remain in the

opposition," said Boris Vallaud, the leader of the Socialists'

parliamentary bloc.

VIEW FROM THE LEFT

Reaction to Bayrou's appointment on the left will be a

concern for Macron, with the prime minister likely living

day-to-day, at the mercy of the president's opponents, for the

foreseeable future.

Macron will hope Bayrou can stave off no-confidence votes

until at least July, when France will be able to hold a new

parliamentary election.

Far-left France Unbowed party leaders said they would be

seeking to immediately remove Bayrou, while leaders from other

left-wing parties took a more nuanced approach.

Greens boss Marine Tondelier also said she would support a

no-confidence motion if the prime minister ignored their tax and

pensions concerns.

Communist leader Fabien Roussel said his party would hold

fire against Bayrou and decide on a case-by-case basis if he

promises not to ram through legislation.

Jordan Bardella, president of the far-right National Rally

(RN) party, said it would not be calling for an immediate

no-confidence motion, while fellow RN leader Marine Le Pen said

Bayrou should listen to the opposition's budgetary wishes.

REAL TEST OVER 2025 BUDGET LOOMS

Barnier's budget bill, which aimed for 60 billion euros

($63 billion) in savings to assuage investors increasingly

concerned by France's 6% deficit, was deemed too miserly by the

far-right and left. The government's failure to find a way out

of the gridlock has seen French borrowing costs push higher.

XTB Research Director Kathleen Brooks said Bayrou's

appointment was unlikely to have a major impact on French bonds.

However, she said the CAC 40 French stock index is

underperforming German stocks by a three-decade margin.

"With France still mired in political turmoil, narrowing

this gap is an uphill struggle, even with a new PM," she wrote.

Macron named Bayrou as justice minister in 2017 but he

resigned only weeks later amid an investigation into his party's

alleged fraudulent employment of parliamentary assistants. He

was acquitted of fraud charges this year.

($1 = 0.9537 euros)

(Reporting by Dominique Vidalon; additional reporting by Michel

Rose and Elizabeth Pineau; writing by Gabriel Stargardter;

editing by Richard Lough, Angus MacSwan and Ros Russell)