Executives warn of recession risks and an investment freeze as Prime Minister François Bayrou faces a September 8 confidence vote over a €44bn deficit plan.

France’s business establishment is bracing for a fresh shock as Prime Minister François Bayrou prepares to put his minority government on the line in a high‑stakes confidence vote next Monday, September 8. Company chiefs say the latest bout of political turmoil—triggered by Bayrou’s plan to rein in the widening deficit with roughly €44 billion in spending cuts and tax measures—threatens to sap consumer confidence, choke off investment and drag the economy back toward recession.

The warnings have grown louder since Bayrou’s surprise announcement last week. In Paris, at MEDEF’s LaREF summer forum, retail titan Alexandre Bompard of Carrefour cautioned that prolonged uncertainty is already weighing on shoppers’ mood and on corporate planning cycles. Employers’ federation head Patrick Martin said he was “appalled” by the political impasse and urged lawmakers to find a path to stability. The signal from the boardroom is unambiguous: the paralysis gripping the National Assembly is turning into an economic problem.

Markets have echoed that anxiety. French government bond yields jumped after the confidence vote was called, and the premium investors demand to hold French 10‑year OATs over equivalent German Bunds widened to multi‑month highs. The CAC 40 slid as bank stocks led losses, a reflection of concern that higher funding costs and weaker growth could squeeze margins. While the moves were hardly panic—levels remain well below the peaks of the eurozone debt crisis—the market’s message was unmistakable: political risk is back as a macro driver for France.

The vote itself looks perilous for the government. Opposition parties from the far right to the Greens have already vowed to oppose Bayrou, and the Socialist leadership has said it is “inconceivable” that its lawmakers would ride to his rescue. Without a reliable majority and in a parliament fractured into antagonistic blocs, the arithmetic is unforgiving. A defeat would force President Emmanuel Macron to choose between appointing yet another prime minister to lead a caretaker or minority cabinet—or dissolving parliament and sending voters back to the polls.

For corporate France, either outcome prolongs uncertainty. “Both scenarios point to a period of drift,” says the chief financial officer of a large industrial group, who requested anonymity to speak candidly. “Our capex committees can’t green‑light multi‑year projects if we don’t know what the tax base will be, how fast depreciation schedules might change, or whether payroll charges will rise.” Several finance directors told this newspaper that they are revisiting guidance, delaying non‑critical hires and pushing back discretionary investment until the political horizon clears.

Bayrou frames his plan as unavoidable fiscal housekeeping after years of crisis‑era spending. Public debt has climbed above 113% of GDP and last year’s deficit was nearly twice the EU’s 3% ceiling. The package mixes tighter operating‑expense controls with revenue measures and some controversial productivity ideas, including scrapping two public holidays and freezing most state spending lines in 2026. He argues that without decisive action, France risks a steady erosion of credibility with investors and partners in Brussels.

So far, that argument has not persuaded parliament—or the country. Polls published after his announcement suggest most voters prefer new elections to another reshuffle at the top. Trade unions are mobilizing for demonstrations in mid‑September, while left‑wing parties denounce what they call austerity by another name. On the right, fiscal hawks say the plan hits households without attacking structural overspending. Even within the center, Bayrou has struggled to stitch together the cross‑party pact he sought during August, a month he controversially described as “impossible for talks” because “everyone was on holiday,” a remark that landed badly in a cost‑of‑living squeeze.

Business groups stop short of endorsing every line of the program, but most say a credible path back toward EU fiscal thresholds is needed to keep borrowing costs in check. Higher risk premia on French debt filter quickly through to the real economy—raising mortgage rates, lifting corporate bond coupons and, for some SMEs, closing markets outright. Bank treasurers note that a 25–50 basis‑point jump in sovereign yields can feed directly into loan pricing within weeks. “Uncertainty is the most expensive tax,” says a senior banker at a Paris‑listed lender. “It’s invisible but it compounds.”

The macro backdrop is fragile. After a modest second‑quarter pickup led by household spending, forecasters now pencil in barely half a percent growth for 2025, with output sensitive to confidence shocks. Exporters complain of weak order books in Germany and China. Investment survey data remain soft, and the unemployment rate has started creeping up from post‑pandemic lows. The longer the political limbo lasts, CEOs say, the greater the risk that firms cut rather than carry optional costs into the autumn.

France’s European partners are watching closely. The European Central Bank has avoided any hint of market panic, but officials say they are tracking OAT‑Bund spreads and stand ready to ensure orderly conditions if volatility spikes. Ratings agencies, which spared France from a downgrade earlier this year, have warned repeatedly that fiscal slippage and policy gridlock are negative for the outlook. For multinationals with French footprints, the question is not whether France remains investable—it is—but whether the cost of capital attached to that investment is rising faster than returns.

At the company level, contingency planning is already under way. A major automotive supplier said it has drafted “Plan B” and “Plan C” budget scenarios with alternative wage‑indexation assumptions, energy‑price hedges and working‑capital buffers. A consumer‑goods group said it will reroute part of its marketing spend toward markets where demand looks more resilient, while a tech firm is freezing offers for non‑engineering roles pending the vote outcome. Large‑cap treasurers rushed to pre‑fund autumn needs last week to avoid paying wider spreads in September if volatility persists.

The political stakes are high for Macron as well. His last premier fell to a budget revolt late in 2024, after snap elections left the Assembly hung. Bayrou—a veteran centrist and one of Macron’s earliest allies—was meant to steady the ship. Instead, the premier now finds himself fighting to survive nine months into the job, after choosing to “own” the austerity battle and dare parliament to say no. If he loses, Macron can try again with a technocratic figure, attempt a fragile issue‑by‑issue coalition, or gamble on new elections—none of them an easy sell to weary voters or to markets that crave predictability.

For businesses, the details of the fiscal mix matter as much as the headcount in Matignon. CFOs say they are watching four levers: (1) whether the government sticks to nominal spending caps that actually bite in 2026; (2) the balance between tax‑base broadening and headline rate hikes; (3) labour‑market measures that could ease hiring bottlenecks without stoking wage inflation; and (4) the treatment of green‑transition incentives that many industrials have already baked into multi‑year investment cases. On each, executives say, the current noise obscures the signal.

The social dimension is equally fraught. Unions are preparing street protests against the budget blueprint, and culture‑sector workers have already mobilized against cuts. The memory of past flare‑ups—over fuel taxes, pension reform and wages—hangs over the rentrée. Executives fear a replay of stop‑start operations and sporadic supply‑chain disruptions if demonstrations escalate. Retailers warn that a new wave of pessimism could hit discretionary spending just as back‑to‑school promotions wind down and households confront higher utility bills into the colder months.

Despite the drumbeat of warnings, not all signals are flashing red. Bank capital levels are far stronger than a decade ago, and household balance sheets, while strained, still show pockets of excess savings in middle‑ and higher‑income cohorts. A number of foreign investors say they view France as a long‑term play anchored by its infrastructure, talent base and scale—provided policy stops whipsawing. “We’re staying the course, but we need a horizon,” says a North American fund manager with major French holdings.

In the narrow window before the vote, the government is making an all‑out case to the public. Bayrou has cast the showdown as a test of national resolve—saying the ballot is about the fate of France rather than the fate of a premier. He has hinted at tweaks to the most controversial ideas, such as revisiting which holidays might be scrapped, in the hope of peeling off a handful of opposition votes or softening public ire. Finance officials have fanned out to reassure investors that there is no systemic risk to banks and that cash‑management buffers can withstand market volatility.

Yet the business mood is defined less by fear than by fatigue—an exhaustion with near‑permanent crisis management. Executives recall the stop‑start pattern of the last several years: yellow‑vest unrest, a pandemic, energy shocks after Russia’s invasion of Ukraine, pension strikes, a snap election, then months of legislative trench warfare. Each episode was survivable; together they have eroded confidence in France’s ability to sustain a coherent policy path.

A defeat on September 8 would not settle that question. It would merely reset the chessboard, with a new caretaker team or another trek to the ballot box. Either way, business leaders say, the imperative is to put the deficit on a credible downward track while building a workable cross‑party compact that can pass a budget without resorting to brinkmanship. That combination—fiscal clarity plus political predictability—is the antidote companies say is missing.

Until then, boardrooms and trading floors will remain on alert. Credit committees will shade more conservative; CFOs will add basis points to their hurdle rates; and hiring managers will comb through requisitions with fresh skepticism. It is not a crisis—at least not yet. But as France heads into a decisive week, the country’s economic guardians are making their view plain: policy uncertainty is a growth risk France can no longer afford.

Sources: Public remarks by French business leaders and officials; market data and reporting from Reuters, Le Monde, France 24, RFI, Bloomberg and the Financial Times in the week of August 25–September 1, 2025.