I had forgotten Franglais; looking at the "Le corner" play on Lecornu, it's pretty funny.
From Rabo, October 15:
While Lecornu is now seen to survive the two censure motions on Thursday, he also needs to convince markets. There is also fresh news from China, the US and the UK....
....MUCH MORE (PDF download site):
Market comments
We start this daily in France, where Prime Minister Sébastien Lecornu presented his draft budget to the Council of Ministers and addressed parliament. The proposal included his initial 4.7% deficit target and no changes to the pension reform, but he immediately stressed that the draft was “prepared for debate.” He signalled the target could be relaxed to just below 5%, that the pension reform raising the retirement age to 64 would be suspended until after the 2027 presidential elections, that temporary tax hikes on the wealthy and large corporates would be extended, and that he would not invoke Article 49.3 to bypass parliament.
That long list of concessions turned out to be enough to placate the Socialist Party, which holds a pivotal position in the fragmented parliament. They have decided not to table a motion of censure themselves. But has France now turned le corner? Not yet. The hard-left and far-right have already filed censure motions that Lecornu needs to survive. By suspending pension reform, he may have secured Socialist support, but he now risks losing votes from centre-right Horizons or Republican MPs who don’t toe the party line. In France’s fractured legislature, winning votes on one side leads to losses on the other side.
While Lecornu is actually seen to survive the two censure motions on Thursday, he also needs to convince markets. The pension reform suspension costs €400mn in 2026 and €1.8bn in 2027.
That’s not a big deal in the short term, but a permanent repeal would add around €13bn annually from the next decade. Without offsetting measures, which, as this process shows, are difficult to achieve, France’s debt ratio would fail to stabilise. It’s a key reason why markets responded cautiously. The CAC 40 ended the day 0.2% lower, although up 0.8% since Lecornu began speaking, barely outperforming the STOXX Europe 600 (-0.4%). The 10-year OAT-Bund spread narrowed by 5bp to 78bp.
As we argued last week, the scope for further rally is limited. Near-term political risks persist until budget negotiations conclude, and longer-term compromises may dilute fiscal consolidation and leave the French curve exposed to future setbacks. Finally, it’s worth noting that passing the budget will be harder than surviving a confidence vote. After all, if the government sticks to its pledge of not invoking Article 49.3, a majority of the French MPs must actually vote for the budget.
President Trump has added cooking oil to the growing list of trade flashpoints with China. In response to Beijing’s suspension of U.S. soybean purchases – an action Trump branded “Economically Hostile” – the administration is now “considering terminating business with China having to do with Cooking Oil.” China has indeed pivoted toward sourcing from Brazil and Argentina, leaving U.S. producers scrambling for alternative buyers.
While cooking oil itself is a bit of a nothing burger (Chinese exports to the U.S. have been negligible since May, mostly consisting of used oil for biofuels), the escalation in rhetoric ahead of a potentially pivotal Trump-Xi meeting at the APEC summit in South Korea is anything but that. China’s messaging has hardened too, with a probe into the impact of U.S. maritime restrictions and sanctions targeting the American arms of South Korean shipping firms. Tensions between Europe and China are also rising, with fresh disputes over forced technology transfers and rare earths usage. It suggests once more that U.S.-China frictions are no longer contained....
