The French government collapsed yesterday after Prime Minister Michel Barnier, only in the job for three months, was easily ousted in a no-confidence vote. Barnier's downfall follows major disagreements with Marine Le Pen's far right and the left-wing New Popular Front over his budget proposals which will now be withdrawn. Strictly speaking, the loss of his prime minister has no implications for the position of President Emmanuel Macron but pressure is steadily mounting on him to call early presidential elections (not due until 2027).

Rising political instability in the Eurozone's second largest member state mirrors a similar situation in Germany where early federal elections have already been called for February 2025. Policy paralysis in both can only deter would-be overseas investment and add to doubts about the EU's ability to increase its funding for Ukraine's war against Russia. None of which is good news for the euro.

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