The French Prime Minister will seek a vote of confidence on September 8th, amid opposition intent on obstructing the proposed budget plan. Should the new budget fail to pass, the prior year’s budget will remain effective by decree until a new finance law is adopted.
Over the coming months, France’s economic growth is projected to experience modest improvement, driven by stronger consumption and investment. However, ongoing policy uncertainty may weigh on sentiment. Public debt levels are expected to rise due to persistent deficits and higher interest costs. Nevertheless, the historically low cost of borrowing and a longer debt maturity profile have kept debt servicing manageable, mitigating the impact of rising rates. Looking ahead, accelerated fiscal consolidation in the next fiscal year will be critical in signalling the trajectory of France’s debt sustainability.
Political uncertainty has increased pressure on French government bonds, resulting in volatility in spreads that is likely to persist until greater political clarity is achieved. Despite this, the French government bond market enters this period from a position of relative strength, supported by high liquidity and the European Central Bank’s accommodative monetary policy stance.
The announcement of the Prime Minister’s confidence vote prompted a negative reaction in the French equity market, triggering profit-taking, particularly in domestic sectors such as financials, which had outperformed recently. It is important to note, however, that much of the political risk appears to be priced in, and over 80% of revenues for French-listed companies are generated internationally. More broadly, European equities continue to present relatively attractive valuations compared to their US counterparts, offering opportunities to increase exposure during market pullbacks—especially within areas aligned with long-term trends and initiatives
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Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 3 September 2025. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results.
Date of first use: 3 September 2025
Doc ID: 4788119