French Finance Minister Antoine Armand has indicated a willingness to compromise on the 2025 budget bill to prevent the government’s collapse amid escalating threats from opposition parties, Bloomberg reports.
Speaking on RMC radio Thursday, Armand acknowledged the potential for significant concessions.
“The question is whether it’s better to have a budget that isn’t exactly the one we want or no budget at all,” Armand said. “Obviously, it’s better to work on a compromise budget; otherwise, we risk political instability.”
Prime Minister Michel Barnier’s government is facing a critical juncture. Opposition lawmakers are poised to launch no-confidence votes over the government’s fiscal plans, creating a real possibility of the government being toppled in the coming weeks.
This political uncertainty has already rattled financial markets. Investors have reacted by selling French assets, pushing up French borrowing costs relative to other European nations. On Thursday, the yield on 10-year French government bonds reached parity with that of Greece for the first time on record, a stark indicator of investor concern.
However, following Armand’s comments suggesting a willingness to negotiate, the French-German bond yield spread narrowed by three basis points to 83 basis points. This followed a widening to 90 basis points on Wednesday as markets anticipated a higher probability of parliamentary rejection of the budget. The narrowing suggests that investors are reacting positively to the prospect of a negotiated solution.
