By Antoine Dubois

August 26, 2025 at 10:15 AM | Updated August 26, 2025 at 11:00 AM

PARIS – France is facing growing economic headwinds as markets react nervously to Prime Minister François Bayrou’s decision to call a confidence vote on September 8th. The announcement has already triggered a sell-off in the CAC 40, with the benchmark index falling 1.59% today, and is pushing French borrowing costs dangerously close to those of Italy – a nation long considered a barometer of Eurozone stability.

Speaking this morning, Finance Minister Éric Lombard acknowledged the mounting pressures, warning that a failure to maintain market confidence could result in intervention from the International Monetary Fund (IMF). While insisting he doesn’t seek to instill fear, Lombard admitted the risk is “real” and that avoiding IMF involvement remains a top priority.

“Our responsibility as a government is to avert crisis,” Lombard stated, emphasizing the government’s commitment to maintaining fiscal stability. However, the announcement of the confidence vote – prompted by Bayrou’s proposed austerity budget – has clearly shaken investor confidence.

The rising cost of servicing France’s national debt is a particular concern. Lombard highlighted that the spread between French and Italian government bonds has narrowed to just 0.03 percentage points last night, signaling a loss of confidence in France’s economic trajectory. “We risk paying more for our debt than the Italians,” he warned.

The proposed budget for 2026, aiming for €44 billion in savings, includes controversial measures such as the elimination of two public holidays. These proposals have sparked widespread protests and a planned nationwide blockade on September 10th, further exacerbating the political and economic uncertainty.

Lombard stressed the need for a budget based on both “redressment and equity,” calling on wealthier citizens to contribute more towards reducing the national debt. He also emphasized the ongoing dialogue necessary to achieve the savings target, appealing for a shared effort among all sectors of society.

However, analysts warn that Bayrou’s gamble on the confidence vote may backfire. “The markets are clearly pricing in a significant risk of government collapse,” said Isabelle Roux, Senior Economist at Société Générale. “The longer this political deadlock persists, the higher the likelihood of further economic deterioration.”

Related Coverage:

• Analysis: Bayrou’s High-Stakes Gamble – Can He Unite France Behind Austerity?

• Protests Intensify as Public Holiday Cuts Spark Public Outrage

• IMF Watchdog Warns of Growing Debt Vulnerabilities in Eurozone

• Exclusive Interview: Finance Minister Details Plan for Fiscal Consolidation

• Podcast: Expert Panel Discusses the Future of the French Economy