| Prime Minister François Bayrou said during his budget presentation this week that this was France’s last chance to rein in government spending and attack its yawning deficit before hurtling over the proverbial cliff. He may well be right, but he lacks a key element in his effort to get a budget across the line in the autumn and avoid being pitched out by angry opposition parties (or maybe even by some allies, as he wryly noted): a crisis in the here-and-now. Sure, France’s economy isn’t growing much, unemployment is projected to creep up and the political class seems mired in fin-de-règne maneuvering before the 2027 presidential campaign kicks off. But there isn’t the kind of current economic or financial disaster that can focus the minds and convince a recalcitrant population to take the bitter medicine of frozen benefit payments and fewer public holidays.  François Bayrou Photographer: Nathan Laine/Bloomberg But that’s exactly what Bayrou is counting on: that popular opinion will coalesce around him and convince at least one party — maybe the Socialists, maybe the National Rally — to abstain from the no-confidence motions coming in the fall. And by doing so, save his budget and his job. A crisis could still come, and may even be likely, according to some analysts, but for the moment, it’s nowhere to be seen. The extra yield investors demand for French 10-year bonds compared with German ones is around 70 basis points, slightly narrower than the average spread over the past year. French stocks continue to lag most other European bourses, but that gap has narrowed over the past few months, and while the euro has pulled back slightly from the four-year peak against the dollar it hit this month, it remains stronger than at any other moment since late 2021. And there are still some unknowns in Bayrou’s budget that might scare part of the population into wanting him gone, namely the rich. In his presentation, Bayrou said the wealthiest would be hit with a “solidarity contribution.” He gave no indication how much this would be or who would be affected. But since he also promised to go after tax shelters, you can be sure that many of those who felt targeted by last year’s draft 2025 budget have already restarted asset-protection efforts, which could include checking out the lifestyle in Milan — an increasingly popular destination for rich fiscal exiles. Quick-turn polling data shows Bayrou’s task is difficult, but not impossible. According to an Ifop poll for LCI, 57% of French people think a deficit-cutting plan is needed given the state of the country’s finances and its debt, but only 31% thought his plan was realistic and just 26% felt it to be fair. Bayrou will have to work hard to bring up those last two figures if he’s to have any chance of winning his gamble on popular pressure seeing him through. A growing number of European Union member states want the bloc to activate its most powerful trade tool against the US should the two sides fail to reach an acceptable agreement by Aug. 1. Renault shares sank after the French automaker slashed its profitability outlook and named company veteran Duncan Minto interim chief executive officer. President Emmanuel Macron said France will make a “new” and “historic” effort to increase defense spending to counter an acceleration of threats to freedom in Europe and the risk of outright war in the coming years.  A self-propelled howitzer at the Bastille Day parade in Paris on July 14, 2025. Photographer: Nathan Laine/Bloomberg The finance ministers of Germany and France, the euro area’s two biggest economies, pledged to join forces to provide additional support for European startups. Publicis Groupe raised its guidance for the year, buoyed by a string of new customer wins that defied a broader advertising slowdown. Electricite de France is considering selling a roughly 50% stake in its North American renewable power business, which could fetch about €2 billion. It may also sell some or all of its French district heating and cooling business. Italian prosecutors are investigating persistent worker abuses linked to multiple well-known fashion labels including Armani and LVMH-owned Loro Piana and Dior.  A display of cashmere pullovers in a Loro Piana store in Milan. Photographer: Alessia Pierdomenico Wednesday: Macron meets with German Chancellor Merz in Berlin Thursday: LVMH, BNP and TotalEnergies among companies reporting earnings; French July preliminary PMI data, business and manufacturing confidence Friday: Remy Cointreau earnings; July consumer confidence Why does Art Deco jewelry still command millions 100 years later? It’s been a century since the exhibition in Paris gave birth to a movement. Here’s why its appeal has never faded.  The Sassoon Cartier necklace, circa 1935, sold for 4.4 million Swiss francs in 2024. Source: CHRISTIE’S IMAGES LTD. 202 | 
