Capital Macro: The political deadlock and deficit crisis in France remain unresolved, and the yield on French government bonds may rise.

Andrew Kenningham, macroeconomist at Capital Economics, stated that after French Prime Minister Beru announced a confidence vote in parliament on fiscal policy, the cost of French public debt may rise due to political and financial difficulties. Kenningham believes that the most likely outcome is Beru losing the vote, President Macron appointing a new Prime Minister for the fourth time in a year, but this will neither break the political deadlock nor solve France's severe deficit problem. He pointed out: "France's political arithmetic is as unsolvable as its financial arithmetic." Kenningham warned that if the budget deficit continues to not be reduced, it may worsen the crisis and damage market confidence. He stated: "We still believe that the outlook for French public debt is very bleak."