France's confidence vote: Bayrou's gamble

French Prime Minister Bayrou has called for a vote of confidence in his government on September 8. With this vote of confidence, the prime minister essentially wants to seek parliament’s support to continue drafting a budget for 2026. But it is a big gamble, that adds a layer of political uncertainty on top of fiscal trouble. The vote will probably cost Bayrou his job. Nevertheless, we argue that much bad news is already in the price, and we see relatively limited risk for French spreads.