Scope Ratings Agency: French Government collapse most likely outcome, would be credit negative.

Scope Ratings Agency: French Government collapse most likely outcome, would be credit negative.

Title: French Government Collapse Looms as Opposition Grows

French Prime Minister Francois Bayrou's government faces an increasing likelihood of collapse, according to opposition parties and financial markets. The French stock market and debt spreads have reacted negatively to the prospect of political instability, underscoring the potential financial implications of a government collapse.

Bayrou announced a confidence vote scheduled for September 8, seeking parliamentary approval for his austerity plans. However, opposition parties on both the far-left and far-right have indicated they will vote against the motion, making it almost certain that Bayrou's government will not survive [2].

The uncertainty surrounding the government's future has led to a significant drop in the French stock market. The CAC 40 index fell by 2% on Tuesday, following the announcement of the confidence vote [2]. Additionally, the yield on the 10-year French government bond rose by 1 basis point, further widening the gap with German yields [1].

Scope Ratings Agency has issued a statement indicating that a government collapse is the most likely outcome, which would be credit-negative for France. The agency points out that political instability and policy opacity have been persistent issues in France since the dissolution of Parliament in June 2024 [1].

If the government collapses, French President Emmanuel Macron will have several options. He could appoint a new prime minister, call for new legislative elections, or even resign and trigger a presidential election. However, the agency notes that Macron is unlikely to call for new elections, as it could further weaken his position in the National Assembly [1].

The potential collapse of the government could also hinder Europe's progress on defense, energy policy, and institutional reform. The political deadlock in France may prevent the EU from making meaningful progress on these fronts [1].

In conclusion, the French government's future remains uncertain, with a high likelihood of collapse. The potential impact on the French economy and the broader European Union is significant, with financial markets already reacting negatively to the news. Investors and financial professionals should closely monitor the situation as it unfolds.

References
[1] https://www.morningstar.com/news/marketwatch/2025082621/billions-wiped-off-value-of-french-banks-with-bayrou-led-government-on-verge-of-collapse
[2] https://www.newsday.com/news/nation/france-government-collapse-confidence-vote-bayrou-a76251
[3] https://www.bloomberg.com/news/articles/2025-08-26/french-premier-risks-government-collapse-as-opposition-grows