Transcription of the video "France, market and elections"

Hadrien  Camatte Economist France, Belgium Euro area : "There will be key challenges ahead for the French economy with a very busy electoral cycle. 

The French economy is facing numerous headwinds. 

First, GDP growth is decreasing, it’s slowing down compared to its European peers. 

And we expect GDP growth to reach 0.5% this year and 0.8% for next year. 

Second thing, we need to say that there will be a new fiscal slippage for the public deficit, expected at 5.4% for this year, compared to 5%, the target for next year. 

And of course, there will be key challenges ahead 

And of course, there will be key challenges ahead for the French economy with a very busy electoral cycle. 

First, there will be the budget. Budget to pass with a fragmented National Assembly, then presidential elections expected in April and May 2027, and then it's very likely to see snap elections for the National Assembly. 

So that's a very busy schedule for the French economy. That is, of course, facing numerous headwinds, but that has a lot of strengths, especially its private sector. 

I would like to mention spacecraft and aircraft, electrical equipments and some key industrial and service sectors."

 

Théophile Lergrand, Rates Strategist : "The French government bond market is facing some trouble, with investors vigilant on the radar. 

The ten-year OAT-Bund spread has been widening from 70 bps to 150 bps over the last days. 

What could stop a bit this widening pressure on the spread? 

First, we could have some relief on the geopolitical side, with some geopolitical descalation that could lead to a decrease in Brent and gas and electricity, which would change a bit the view on central bank's tightening scenario. 

The second thing is that we could have a budget vote by the end of this year, but it seems unlikely right now. 

And if we have a positive presidential campaign with candidates having a more consensual on the fiscal consolidation, we could have some stabilization ahead. 

And the third stabilization process could come from the ECB, where the ECB could stop hiking rates or hiking in a less pathway. 

The third thing is that we have potentially the announcement of the end of the quantitative tightening, which could have an impact on the decrease in the balance sheet.And then you have, of course, some backstops such as the TPI and the OMT."