French business leaders warn of economic risk as Bayrou’s confidence vote jolts markets French business leaders are warning about economic fallout from the prime minister’s decision to call a confidence vote, with fears of recession resurfacing as investors react to the latest bout of political uncertainty in Paris. Market gauges and credit spreads moved sharply as the prospect of government collapse returned to the fore. Prime Minister François Bayrou has slated a confidence vote for 8 September tied to his budget plans. France’s minority administration lacks a stable majority and three opposition blocs have said they will not back the government. Polling points to pressure for fresh elections if the cabinet falls. Equities and bonds sold off after the announcement. The CAC 40 dropped to a three week low before a modest rebound, while banking stocks remained weak. The risk premium on French debt widened as investors adjusted positions in response to the political timetable and uncertainty over fiscal consolidation. French government bond yields climbed to their highest since March and the spread between ten year French and German benchmarks moved toward eighty basis points, the widest since April, signalling increased caution over the outlook. Traders cited hedging for instability after the confidence vote was set. Business leaders described heavy economic risks from prolonged instability and from a failed confidence vote. Executives warned about the potential drag on investment and consumer sentiment and flagged the danger that widening funding costs could feed through to the broader economy. Reports in European financial media said the French risk premium surpassed that of Spain, Portugal and Greece, with only Italy higher, as markets weighed the government’s chances in parliament and the scale of proposed deficit reduction. Retail leaders also cautioned about the growth outlook. Bayrou has said he will meet party leaders in the coming days and that he has the full support of the president. The calendar leaves limited time to secure votes before deputies return to pass the budget framework. Official messaging has aimed to steady markets while parliamentary arithmetic remains fluid. Investors remain focused on the 8 September vote and on any revisions to the budget plan that might shift parliamentary positions. European indices steadied after the initial selloff, but sentiment toward French assets remains sensitive to headlines ahead of the confidence motion....