The possibility of a decline in the French government will burden the economy
New political instability
France entered a politically unstable autumn, with Prime Minister François Bayrou announced on Monday that he would seek a confidence in the National Assembly on September 8. Trapped in the deadlock over discussions about the proposal for the 2026 budget and threatened by social movements that called for the “total blockade” that began on September 10, François Bayrou had decided to use the voice of confidence. On Monday, at a press conference called in a short time, the Prime Minister announced that on September 8, he would deliver a new policy statement, after which he would ask for the confidence of the deputy.
Public finance in the heart of the problem
In the heart of the crisis lies in the 2026 budget. Delivered on July 15, the Bayrou fiscal plan aims to reduce the public deficit from the 5.4% projection in 2025 to 4.6% in 2026, and to 2.8% in 2029. The plan includes € 43.8 billion in savings for 2026, 80%
The goal is that debt reaches 117.6% of GDP in 2026 and 117.2% in 2029, compared to 118.3% and 125.3% if there are no changes made. But the plan had met the opposition in a round voice. All major parties have refused, quoting their social impacts and lack of political consensus. Bayrou’s decision to bind the budget with a trust voice is the last attempt to force calculations on what he calls “urgency and gravity” of the French fiscal situation.
The obstacles are almost impossible to overcome
The Bayrou centric coalition has only 210 out of 577 seats in the assembly. RN Right, LFI, Green, and Communist RN, which is the most left-equal to 264 MPs, stated that they would vote against it. Only the socialist party can provide balance, but the initial signal shows that they do not want to support the government without a great revision of the budget, which seems impossible.
Unlike avoiding a motion that does not believe, winning the voices of trust requires an absolute majority. Although many can change between now and September 8, at this time, the most likely scenario is that the prime minister will not win the votes of trust and the French government will fall.
If Bayrou loses votes, President Macron will face a difficult choice: appoint a new prime minister who is able to form a government in a fragmented assembly, or dissolve parliament and call a new election – something he previously ignored. Any path will inject fresh uncertainty into the fragile political landscape.
The possibility of government decline will greatly burden the French economy. With only 0.8% GDP growth that is expected this year, the economy is weak, and the political crisis adds to a new layer of uncertainty. Compiling and passing the 2026 budget will be more difficult, delay fiscal consolidation and potentially worsen the French debt path. The longer the reforms are postponed, the greater the ultimate adjustment.
In short, France’s political instability is an economic obligation. Investors and institutions will watch carefully – not only for what happened on September 8, but for what happened next.
Source: Ing
