Heads up: French government faces collapse as Bayrou risks budget confidence vote (Sept 8) | investingLive

France’s minority government faces collapse as PM Bayrou calls a September 8 confidence vote on sweeping budget cuts, with major opposition parties already lined up against him. Political uncertainty rattled markets, pushing French bond spreads wider and knocking the CAC 40 lower.

–

France’s minority government faces a severe test after Prime Minister François Bayrou announced a September 8 confidence vote on his €44 billion budget-cutting plan. The far-right National Rally, Greens and Socialists all signalled they will oppose him, making the government’s collapse increasingly likely.

If Bayrou loses, his cabinet will fall, forcing President Emmanuel Macron to either appoint a new prime minister, keep Bayrou as caretaker, or call fresh elections. Political turmoil has already unsettled markets: French bond spreads over German Bunds widened 5bp to the highest since mid-June, while the CAC 40 dropped 1.6%.

Macron has already lost one prime minister to a budget no-confidence vote last year, underscoring the fragility of his administration. Bayrou admitted the gamble was risky but said failure to act on France’s debt burden—5.8% of GDP in 2024, nearly double EU limits—was riskier still. Even survival in September would not guarantee passage of the budget itself, which will face another vote later in the year.