Investors made clear on Tuesday the depth of their concerns over President Emmanuel Macron’s gamble to call for new elections in France, driving up the nation’s borrowing costs, pushing down stock prices and prompting the Moody’s ratings agency to warn it may downgrade French sovereign debt as risks of political instability rise.
Mr. Macron’s dissolution of the lower house of Parliament on Sunday after his party was battered by Marine Le Pen’s far-right party in European Parliament elections has ignited concerns that the government could grind to a stalemate.
The turmoil has focused attention on France’s fragile finances, and the prospect of legislative gridlock that could undermine the government’s ability to address it.
“This decision will not ease the economic challenges facing the country,” Philippe Ledent, senior economist at ING Bank, wrote in a note to clients.
Public finances and the performance of the French economy will be “at the heart of the electoral campaign,” he added.
Persons:
Emmanuel Macron’s, Le, ” Philippe Ledent, ”, Macron
Organizations:
ING Bank, Public, Paris Bourse
Locations:
France, Paris