French CAC 40 futures are now down 0.7% on the day and are continuing the declines from yesterday, in which the benchmark index closed lower by 1.5%. That is threatening to undo the gains this month, after the impressive rebound following the 1 August dip.
The catalyst for the drop this week is a political one with Europe’s second largest economy set to face another crisis on that front. French prime minister, François Bayrou, is under intense scrutiny over his unpopular measures to address concerns surrounding France’s public finances. For some context, France’s budget deficit touched 5.8% of GDP last year, almost double the limit set out by the EU of 3%.
Bayrou is calling for €44 billion in cuts in the 2026 budget guidelines and that hasn’t gone down well to say the least. That being said, he is bold though in calling for a vote to run this all down on 8 September. If he fails, it’s basically a vote of no confidence in Bayrou itself and that pin France down into deeper political shambles.
That especially after what was seen last year already, in which Barnier’s government didn’t even survive longer than three months. And now, another change looks imminent.
This article was written by Justin Low at investinglive.com.
