French business leaders jittery over ongoing political crisis and economic fallout

Business leaders in France have expressed concern over the economic impact of the ongoing crisis in government triggering fears of a recession.

French Prime Minister Francois Bayrou had on Monday unexpectedly announced a confidence vote to hold next month. 

Opposition parties in the divided Parliament have said that they will not back Bayrou in the vote slated for 8th September. 

Opinion polls carried out after Bayrou's announcement show most French people now want new national elections, pointing to deepening dissatisfaction with politics and a risk of lasting uncertainty.

"Our morale is tied to the functioning of the state," said Alexandre Bompard, CEO of the country's largest retailer, Carrefour.

"The more uncertainty there is, as is the case right now, the higher the risk of a strong hit on the economy as consumers postpone their spending decisions," Bompard told a business conference.

Earlier, Patrick Martin, head of the Medef employers' group, told the conference he was "appalled" that French politicians could not overcome their differences.

"Those who think they can play with the economy make us face a huge risk," he said.

"We want to stress that, in any case, both scenarios (i.e. new PM or snap elections) would likely mean a prolonged period of uncertainty," Morgan Stanley analysts wrote in a note.

President Macron, whose term runs until 2027, has repeatedly ruled out resigning or calling new parliamentary elections and, though he has not publicly commented on either since Monday, he seems more likely to replace Bayrou with a new prime minister.

If Bayrou loses the vote, he and his government will have to resign. 

This would be the second time in less than a year that a French prime minister has been forced out over budget disagreements.

Macron sought to allay fears after a slump this week in the French stock and bond markets ahead of a looming government confidence vote, telling members of his cabinet on Wednesday (August 27) that France was "solid" a government.

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