France’s already fragile government faces fresh turmoil after lawmakers delayed a key vote on a proposed wealth tax that could determine the fate of Prime Minister Sébastien Lecornu’s minority administration.
Bloomberg (gated) with the info.
Debate on the measure — a Socialist-backed amendment to the 2026 budget bill — was postponed late Saturday after discussions on earlier provisions ran over time.
A failed budget vote would almost certainly prompt the Socialists to file a censure motion, potentially dissolving the National Assembly and forcing new elections.
- the center-left holds just enough seats to swing no-confidence votes and has already leveraged that power to delay pension reform earlier this month.
The government is under growing pressure to find a compromise. France’s fiscal position has deteriorated sharply, with the largest deficit in the euro area and recent credit downgrades, including a negative outlook from Moody’s on Friday. The instability has already driven up borrowing costs on French bonds.
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Political instability in France adds to eurozone fiscal risk after ratings downgrades and widening deficits. Further gridlock or government collapse could weigh on French bonds and the euro as investors demand higher risk premiums.
Indeed, AUD and NZD popped on the news out of US/China talks:
- AUD and NZD jump higher on news of US-China trade agreement
- Positive signs emerge of a US-China deal
- Bessent says China to resume U.S. soybean buys, delay rare-earth curbs as trade deal nears
but EUR/USD is barely changed around 1.1633.
This article was written by Eamonn Sheridan at investinglive.com.