French opposition lawmakers brought the government down on Wednesday, throwing the European Union's second-biggest economic power deeper into a political crisis that threatens its capacity to legislate and rein in a massive budget deficit.

Far-right and left-wing lawmakers joined forces to back a no-confidence motion against Prime Minister Michel Barnier and his government, with a majority 331 votes in support of the motion.

Barnier was expected to tender his resignation and that of his government to President Emmanuel Macron shortly.

The hard left and far right punished Barnier for opting to use special constitutional powers to adopt part of an unpopular budget without a final vote in parliament, where it lacked majority support. The draft budget had sought 60 billion euros ($63.07 billion) in savings in a drive to shrink a gaping deficit.

"This (deficit) reality will not disappear by the magic of a motion of censure," Barnier told lawmakers ahead of the vote, adding the budget deficit would come back to haunt whichever government comes next.

No French government had lost a confidence vote since Georges Pompidou's in 1962. Macron ushered in the crisis by calling a snap election in June that delivered a polarised parliament.

With its president diminished, France now risks ending the year without a stable government or a 2025 budget, although the constitution allows special measures that would avert a U.S.-style government shutdown.

France's political turmoil will further weaken a European Union already reeling from the implosion of Germany's coalition government, and weeks before U.S. President-elect Donald Trump returns to the White House.

"We have arrived at the moment of truth," far-right National Rally leader Marine Le Pen said, adding that Barnier's austerity budget plans had been dangerous and unfair and would have meant chaos for France.

The hard left France Unbowed (LFI) party demanded Macron's resignation.

"With the no-confidence motion, all of the politics of Emmanuel Macron have been defeated and we demand that he goes," said LFI member Mathilde Panot, who urged "early presidential elections" to solve a deepening political crisis.

NO EASY EXIT FROM FRENCH POLITICAL CRISIS

France now faces a period of deep political uncertainty that is already unnerving investors in French sovereign bonds and stocks. Earlier this week, France's borrowing costs briefly exceeded those of Greece, generally considered far more risky.

Macron must now make a choice.

Three sources told Reuters that Macron aimed to install a new prime minister swiftly, with one saying he wanted to name a premier before a ceremony to reopen the Notre-Dame Cathedral on Saturday, which Trump is due to attend.

Any new prime minister would face the same challenges as Barnier in getting bills, including the 2025 budget, adopted by a divided parliament. There can be no new parliamentary election before July.

Macron could alternatively ask Barnier and his ministers to stay on in a caretaker capacity while he takes time to identify a prime minister able to attract sufficient cross-party support to pass legislation.

A caretaker government could either propose emergency legislation to roll the tax-and-spend provisions in the 2024 budget into next year, or invoke special powers to pass the draft 2025 budget by decree - though jurists say this is a legal grey area and the political cost would be huge.

Macron's opponents also could vote down one prime minister after the next.

His rivals say the only meaningful way to end the protracted political crisis is for him to resign, something he has hitherto shown little inclination to do.

ECONOMIC PAIN

The upheaval is not without risk for Le Pen, who has for years sought to convince voters that her party offers a stable government in waiting.

"The French will harshly judge the choice you are going to make," Laurent Wauquiez, a lawmaker from the conservative Les Republicains party who backs Macron, told Le Pen in parliament.

Since Macron called the summer snap election, France's CAC 40 (.FCHI), opens new tab benchmark stock market index has dropped nearly 10% and is the heaviest loser among top EU economies. The euro single currency is down nearly 4%.

"The positive signals ... that were seen over the summer, partly due to the Olympics, are now a thing of the past," Hamburg Commercial Bank economist Tariq Kamal Chaudhry said.

Barnier's draft budget had sought to cut the fiscal deficit from a projected 6% of national output this year to 5% in 2025. Voting down his government would be catastrophic for state finances, he said.

Le Pen shrugged off the warning. She said her party would support any eventual emergency law that rolls over the 2024 budget's tax-and-spend provisions into next year to ensure there is stopgap financing.