According to the CGT, around 800,000 people demonstrated across France, including 250,000 in Paris. The march in Paris began at 2 p.m. from the Porte d’Italie and headed to the Porte de Vincennes after the police headquarters changed the route at the last minute. October 24, 2026. (Photo by Telmo Pinto/NurPhoto via Getty Images)Nurphoto | Nurfoto | Getty Images Unrest in France is fueling investor concerns about the country’s fiscal outlook, after borrowing costs hit their highest level since 2002 last week. Fund managers are assessing whether a prolonged disruption could weaken growth, undermine confidence and make it harder for the government to achieve planned budget savings. Hundreds of thousands of protesters marched in cities across France on Saturday. Largely peaceful demonstrations gave way to clashes in Paris and Marseille as night fell despite a huge security operation aimed at preventing a repeat of last week’s unrest. The Interior Ministry said 410,000 people took part in protests across the country, although unions said the actual figure was double that. Ratings agency Moody’s on Friday maintained its Aa3 credit rating for France, a level it still considers “high grade,” but maintained its negative outlook on the nation. “That the fragmentation of France’s political landscape will continue to harm the functioning of the country’s legislative institutions,” Moody’s said in its report. Moody’s said it could re-stabilize France’s outlook if its institutions can reduce their budget deficit. Can the French government approve its budget? France’s government aims to reduce the budget deficit to 5% of GDP in 2027, from a projected 5.4% in 2026. The National Assembly is due to resume debate on the budget’s fiscal measures, which are intended to generate savings, on October 27, but opposition lawmakers are resisting the plans. Alain Durré, head of economic research for EMEA at Natixis CIB, said the government was determined to avoid a sharp rise in borrowing costs. Durré said the government could try to meet its fiscal targets by invoking Article 49.3, which allows it to push a bill through the assembly without a final vote unless lawmakers can pass a no-confidence motion. OAT 10 years from France. That could help calm nerves and restore investor confidence, Durré added, noting that the recent pressure on French sovereign debt has been driven mainly by tactical portfolio reallocations, with traditional buy-and-hold investors “still on the sidelines.” The yield on benchmark 10-year French government bonds, known as OAT, rose 11 basis points on Thursday to its highest level since 2002. That took the spread over 10-year German Bunds – the benchmark for euro zone debt – to its widest level since November 2011. Charlotte de Montpellier, senior economist for France and Switzerland at ING, said the unrest “adds another layer of uncertainty” to concerns. budget and policy decisions that already weigh on French assets, and “reinforce the perception that any future government will find it difficult to implement the necessary reforms and savings.” the budget will be approved by parliament,” said Matthew Ryan, head of market strategy at Ebury. “Even if it does, it looks like it will be so riddled with concessions on both the left and the right that the deficit problem is not sufficiently addressed.” What damage will the unrest do to France’s growth prospects? New demonstrations are planned for October 24, and a union-backed national day of strikes and protests is scheduled for November 5, with anti-establishment Vest protesters Yellows among those calling for more demonstrations. 40. In a note on October 20 after the previous weekend’s violence, de Montpellier said that while the market can ignore short-term disruptions, “a lasting loss of confidence can have a greater impact.” 2027. If unrest continues, confidence deteriorates further or market tensions intensify, growth could be even weaker.” The yellow vest movement may have reduced French GDP growth in the fourth quarter of 2018 by 0.1 percentage points, according to an INSEE estimate cited by de Montpellier. Strikes during the spring 2023 pension protests reduced first-quarter GDP growth by around 0.1 points. percentages, according to the Banque de France. In his note of October 20, he said that the violence could keep households away from city centers and lead tourists to postpone trips and businesses to delay investments. Durré said that French consumer confidence was already near historic lows before the latest protests, leaving little room for the country to absorb a new macroeconomic shock. He added that the unrest raises “two key warning signs” for the markets. has fallen 4.5% over the past month. ING identified retail, hospitality and tourism, and transport and logistics as the sectors most directly exposed to the turmoil. De Montpellier said shops and shopping centers face lower footfall, closures and lost sales; hotels, cafes, restaurants and travel services risk losing activities that customers are less likely to reschedule. Transport and logistics could also be affected if disruptions persist, it added. CEO Alexandre Bompard said the country is facing an “unprecedented situation.” More than 2,000 companies had been directly affected by Tuesday, ING said, citing estimates from France’s chambers of commerce network. The impact could spread far beyond the companies most directly exposed to the unrest, said Kevin Thozet, a portfolio adviser and member of Carmignac Capital’s investment committee, while prolonged uncertainty could slow loan growth and create credit problems. he told CNBC via email. France’s prestigious luxury sector generates most of its sales abroad. LVMH has relatively limited direct exposure to the French market, with France accounting for only 8% of its revenue in 2025. But the protests could affect tourism and therefore duty-free shopping, which accounts for around 20% of LVMH’s revenue in France, Thozet said. “Six more months of political vacuum is a long time for the markets, the economy and businessmen,” he added.
