French Stocks and Bonds Plummet Amid Threat of Government Collapse

Written by Emily J. Thompson, Senior Investment Analyst

Source: Reuters

Updated: Aug 26 2025

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Source: Reuters

Political Instability in France: The potential collapse of Prime Minister Francois Bayrou's minority government has led to a significant selloff in French stocks and bonds, raising political risks for investors.
Market Reactions: The CAC40 index dropped over 2%, with major banks like BNP Paribas and Societe Generale experiencing declines of more than 6%. Additionally, French government bond yields rose to their highest levels since March.
Confidence Vote Implications: If Bayrou loses the upcoming confidence vote on September 8, it could lead to his removal, prompting President Macron to either appoint a new prime minister or call for snap elections, which may further destabilize the market.
Economic Concerns: Analysts warn that the instability could negatively impact economic growth in France and increase borrowing costs for banks, as the country struggles with a budget deficit significantly above EU limits.

About the author

Emily J. Thompson

Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.