French Prime Minister François Bayrou is set to submit his government to a vote of confidence on 8 September. With the opposition now holding a majority, the anticipated rejection heightens the risk of political deadlock and delays fiscal consolidation efforts. This uncertainty is undermining confidence and is reflected in a higher risk premium on French debt. However, France's structural strengths—such as high liquidity, extended debt maturity, and contained borrowing costs—remain robust. These factors are particularly significant given that the credibility of United States and United Kingdom bond markets is also under pressure. On the equities side, some of the risk has already been priced in. In August, we reduced our exposure to Europe in favour of emerging markets, which are better supported by a weaker US dollar and offer a more attractive risk/reward profile.

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