Europe

French stocks slide 2% as government at risk of collapse in confidence vote

Benchmark CAC 40 index down 2%, extending losses from Monday's decline as 3 main opposition parties announced 'no confidence' vote

Mücahithan Avcıoğlu  | 26.08.2025 - Update : 26.08.2025
French stocks slide 2% as government at risk of collapse in confidence vote

ISTANBUL 

France's benchmark stock index, the CAC 40, was down 2% on Tuesday after the country's three main opposition parties announced that they would not back a confidence vote that was called by French Prime Minister Francois Bayrou.

The CAC 40 index was down to 7,686.69 points as of 0750GMT, extending Monday's 1.59% loss.

Addressing a news conference, Bayrou said he has asked the president, who agreed, to convene parliament in an extraordinary session on Sept. 8.

His government now faces a risk of collapse if they don't have the majority backing the confidence vote.

The main opposition parties, such as the far-right National Rally, the Greens, the left-wing France Unbowed (LFI) and the Socialists, already announced on social media that they will vote against Bayrou.

"We will obviously vote against confidence in Francois Bayrou’s government. Only dissolution will now allow the French to choose their destiny," National Rally leader Marine Le Pen said on US social media company X.

Bayrou warned that France is "in danger" due to being "on the brink of over-indebtedness" as he seeks parliamentary backing to make savings of nearly €44 billion ($51 billion) in the 2026 budget.

He suggested freezing social and pension expenditures, as well as tax bands at 2025 levels, as part of his proposal to slash the French deficit, which was 5.8% of GDP in 2024, by about €44 billion ($51 billion).

On July 15, he presented the National Assembly with the budget plan for 2026. The plan is a component of the government's larger initiative to lower the public debt, which is now one of the highest ratios in the EU at 113% of France's GDP.

The idea has been criticized by opposition MPs as a continuation of strict austerity measures. One of the main causes of conflict in French politics has been the budget talks.

Last year's inability to agree on the 2025 budget caused the Michel Barnier Cabinet to fall in December, when far-right and left-wing parties joined forces to pass a resolution of no-confidence.

Anadolu Agency website contains only a portion of the news stories offered to subscribers in the AA News Broadcasting System (HAS), and in summarized form. Please contact us for subscription options.