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French Prime Minister François Bayra speaks during a press conference in Paris on August 25, 2025.
Dimitar Dilkoff | AFP | Gets the image
The France’s minority government on Tuesday faced the collapse of the collapse for a few weeks, after opposition parties said they would not deprive Prime Minister François Bayru on September 8, tied to his budget reducing plans.
Paris CAC 40 The index was 2% lower on Tuesday. French and long -term borrowing costs are noted above while the country 10-year bond yield up on 2 basic points and its A 30-year yield up to 4 basic points.
France’s demand to reduce its public deficit is a long and very politically controversial topic. Forcing through 2025 budget Without parliamentary approval last year led to The collapse of a pre -government minority led by Michel Barnier. Political volatility has increased in France since time July 2024 G. Parliamentary elections Most of the parties and coalition failed.
Now Bayroug is seeking to transfer the budget for 2026, which contains about 44 billion euros ($ 51.2 billion) by delaying, with its proposals, including well -being and pension costs, as well as tax brackets at the 2025 level. Has it too Suggested to cut two holidays in a very unpopular step.
Government claims to be a deficit that has been deficit 5.8% of the gross domestic product In 2024 – in the picture stated, it will continue to grow without action. The European Union states that its members should focus on 3%deficit to reduce excessive debt.
French economic growth meanwhile was sluggish, Cooling up to 1.2% in 2024 from 1.4% in the previous year.
Speaking to the press on Monday, Bay stated that France’s dependence on debt became “chronic”.
“Our country is in danger because we are at risk of excessive impact,” he said, according to CNBC translation.
Bayer said France’s debt has grown by 2 trillion in the last two decades, noting that the events have been held in the country, including the 2008 global financial crisis, the COVID-19 pandemic, Russia-Ukraine, the spike of inflation and more recently the impact of tariffs on the US. He added that the budget dispute should be resolved through an orderly discussion in the parliament, after which the vote, not through “street contractions and insults”.
Comments from officials from far -right national rally, greenery and socialists suggested that no party would officially support it, risking a government collapse.
Pierre Jevta, Secretary General of the Socialist Party, said on the X Social Media Platform on Monday that the group would vote against the fight, and that the government has no trust in the Parliament and the French people. Jouvet added that the party will submit its own budget proposals in the coming days.
President of the National rally Jordan Bardel – Note His party “will never vote confidence in the government, which makes French people suffer,” according to CNBC.
Risk of the collapse of the “no price”
“If the government loses the vote for confidence, President Macron may seek another prime minister to form a government, which will then be able to transfer the 2026 budget,” Deutsche Bank analysts said on Tuesday.
“Alternatively, Macron may call SNAP elections. The current surveys indicate another distributed result, as it happened after the summer 2024, albeit with the extreme right (national rally) conducting the polls, investors will be vigilant, or can translate this preference to the direct majority at this time.”
After Monday, the news, the spread to the 10-year Italian yield in France has fallen to 9.8 basic points, its lowest level since 1999, according to analysts, the investors have put a similar prize on the political risk of countries. In 2022, up to 180 basic points were distributed.
On Tuesday, Tuesday’s recovery de -Bok, head of the European Strategy Department, said CNBC that the call to vote was a “surprise” for the markets.
“I think this is not the price, we actually place for higher spreads from here. We believe it can easily increase by 10 basic points, maybe even more if it ended in the legislative elections. So I think this is not a price at all, and it is a potentially great story in the next couple,” he said.
“In Europe, it is now about costs more than we have 10-15 years ago …” The task for France is that they have a budget deficit, which you have said earlier () about 5.8% of GDP. This is the biggest budget deficit in the eurozone, and there (there are) open questions to which they will success in reducing costs. So, this is a French part of history. “
Bayra could cling to
Eric Nelson, Head of the G10 FX strategy in Wells Fargo, called the French assets’ forecast “not big,” but said the result of the Bire government was not in advance.
“I believe that part of this issue is that the European shares themselves, the euro themselves, were a very popular impulse trade during the year. What we see in the last couple of days has been a little spinning from some impetus that works, and therefore there is a risk that we can see further promotion of some of these political risks,” said CNBC “Squawk Box.”
“I don’t know what the bayra is definitely going out. There is still some uncertainty. He has many things he can offer the opposition.”
He noted that the French Prime Minister had previously threatened – and now he could return – he plans to remove some public holidays.
“Of course, this will be removed from the table. So, this is not a deal, but they go here a very thin line, and, as I mentioned earlier, given where the market positioning in European assets, there are many risks,” Nelson said.
