Institutions: French political situation brings additional risk premium to the euro

Jinshi data, December 4th, Ebury strategist Matthew Ryan stated in a report that the short-lived government of French Prime Minister Barnier may be on the verge of collapse, adding additional risk premium to the euro. Later on Wednesday, parliament will vote on a motion of no confidence, and all signs indicate that the motion will pass. With no elections until July 2025, it will be difficult to pass a budget before the end of 2025. The government may simply replicate the 2024 budget next year, but this will not provide the cohesive fiscal support needed for the economy, and the focus may be directly on the European Central Bank to support demand in 2025 through lower interest rates.