French protestors have planned blockades and called for the resignation of President Macron after the latest government collapse.
FRA 40 – Daily Chart
France’s top share index held gains on Tuesday, but the price could easily reverse to the support levels at 7,541 with negative headlines.
France saw large scale calls for Emmanuel Macron’s resignation after a confidence vote forced out Prime Minister Francois Bayrou.
The country now faces a fresh political crisis in the coming days, and there is no solution on the table to solve the budget problems. France is now facing a day of protests on Wednesday from a movement called Bloquons Tout – “Let’s Block Everything”. The government is said to be calling on an 80,000 police presence, and that could create further tensions.
Macron has said that he will choose a new prime minister in the coming days, which would be the fifth since 2022. However, each Prime Minister is losing power due to the austerity plans, and it’s hard to see any change. Any new leader will also have to deal with a hung parliament that is split three ways.
Trade unions have called for a strike over the government’s “brutal” budget plans, saying that France “has been sinking into a profound social and democratic crisis”.
The country is also braced for a Friday decision by credit agency Fitch, which could result in its rating being demoted and exacerbating the debt problem. France’s public debt rose to €3.3tn earlier this year, and the latest vote came after proposals for budget cuts of around $45 billion.
A meeting of the European Central Bank this week is also set to focus on the French position. Inflation is back to target, and the economic data is light this week so investors will look for clues on the next moves of the ECB. Discussions of further rate cuts could weaken the euro’s value.
The FRA 40 index could see volatility in the vote from Fitch on Friday.
