France’s stock market faced its worst week since March 2022, driven by fears of a far-right election win that some fear could mark the beginning of more isolationist and interventional policies.

The CAC 40 index dropped almost -6% this week following President Macron's snap election call, while finance minister Bruno Le Maire warned of a financial crisis if extreme parties won.

‍

France is aiming to bring down its budget deficit to 3% by 2027, to meet the maximum borrowing allowed under eurozone rules. Increased government spending, or tax cuts, could undermine that push.

‍

Asked whether the current political instability could lead to a financial crisis, Le Maire said “yes”.

‍

“This is because of the political programmes that are on the table with regard to the question if we will be able, yes or no, to keep financing this debt,” he added.

‍

The gap between France and Germany’s borrowing costs has widened to a seven-year high this week, as investors sold French bonds – pushing down prices, which lifted the yield, or interest rate, on the debt.

‍