French Debt Risk Premium Drops as Government Falls, Macron’s Next Move in Focus

The risk premium that investors demand to hold French debt, compared to German Bunds, dropped on Thursday following the widely anticipated collapse of the French government. The decline in the risk premium signals growing concerns about the country’s political stability.

This development comes after far-right and left-wing lawmakers joined forces earlier this week to support a no-confidence motion against Prime Minister Michel Barnier. The motion passed, intensifying the pressure on Macron’s government. Analysts are now worried that France could be heading toward a slow-burning crisis, which may lead to a deterioration in its sovereign creditworthiness and slower economic growth.

With political tensions rising, analysts are closely watching President Emmanuel Macron’s next move. Despite uncertainty about the future, many analysts remain skeptical that there will be any significant changes in the immediate term. However, sources have indicated that Macron aims to install a new prime minister quickly to address the situation and restore some stability to the government.