Bayrou Goes All-In Before September 8: ‘A Compromise May Be Impossible’

A Country at a Political Flashpoint

France is entering a decisive week. Prime Minister Francois Bayrou has called a vote of confidence on September 8th in an effort to break the deadlock surrounding a €44 billion package of spending cuts and tax increases. The goal is to bring the budget deficit down to 4.6% of GDP from an expected 5.4% this year—but the margin is slim. The opposition has flatly rejected the idea of compromise: National Rally’s Jordan Bardella openly states that the government ‘is going to fall,’ and the Socialist Party’s Olivier Faure calls the decision to vote against the government ‘irrevocable.’

Market Verdict: 80 Basis Points and Mounting Pressure

Investors gave their verdict before the politicians did. The spread between France’s and Germany’s 10-year government bond yields has jumped above 80 basis points—levels last seen in January—after a week of selling pressure. This isn’t just a number on a screen: more expensive financing can force businesses to delay hiring and investment, just as recovery seemed within reach. As Justice Minister Gérald Darmanin warns: Stability is the guarantee that the country doesn’t borrow ‘at too high a cost.’

A Vote of Confidence With No Obvious Allies

Bayrou has gone all-in on talks with the parties in the days leading up to the vote. He sounds ready for a fight—but also coolly realistic: ‘Compromise is a beautiful thing, but I’m not sure it’s possible.’ With the Socialists firmly saying no and the right-wing rejecting negotiations, it’s hard to see where the necessary votes will come from. Meanwhile, unions are preparing September strikes that could further swing the political pendulum.

If the Government Falls—What Then?

A no in the National Assembly would send the ball back to the Élysée Palace. President Emmanuel Macron supports his prime minister and refuses to step down before 2027, but the pressure for snap elections may be difficult to ignore. Alternatives include a new round of negotiations or a more technocratic interim government to meet the minimal fiscal requirements. For now, the course is set with a political sextant in the fog; the next landmark comes on September 8th.

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