PARIS (Reuters) – The gap between the yield of the German Bund and the French 10-year OAT increased sharply on Monday at the start of the session, with investors worried about possible censorship from the government of Michel Barnier, who would complicate the French budgetary outlook.
At 07:45 GMT, the rate spread, a measure of perceived risk on French debt, reached 85.8 basis points, up 5.1 basis points over the session.
The National Rally (RN) will vote on the motion of censure if the government uses article 49.3 to pass the draft Social Security budget (PLFSS), Jordan Bardella, the president of the far-right party, said on Monday.
Uncertainty over the survival of the Barnier government fuels volatility on French rates, whose risk premium on comparable German securities reached its highest since 2012 on Wednesday, at 90.3 basis points.
Michel Barnier should hold his government accountable on Monday for the draft Social Security budget and have recourse to article 49.3 of the Constitution allowing the adoption of a text of law without a vote, for lack of a sufficient majority in the National Assembly.
The text is deemed adopted if no motion of censure against the government is passed. This motion can only be examined within at least 48 hours after its filing, i.e. Wednesday. She must collect 289 votes to bring down the executive.
The left and its nearly 200 elected officials unanimously display their intention to vote for censorship, while the RN has 124 deputies.
(Written by Corentin Chappron, edited by Kate Entringer)
