French Prime Minister faces crucial final sprint before budget vote, greeted with stern test.

The French National Assembly will begin the second reading of the 2026 Social Security Budget Bill on Tuesday, posing a crucial test for Prime Minister Lecornu in pushing controversial fiscal legislation in a divided parliament. The minority government leader must broker unconventional compromises between opposition parties on healthcare welfare spending before the vote next week. However, disagreements between the center-left and center-right on issues such as pensions, taxes, and welfare indexation have stalled progress. Political turmoil in France has rattled the bond market, pushing up the French-German 10-year bond yield spread - a key measure of risk. Nevertheless, as Lecornu makes progress in securing budget approval and the opposition abandons threats to force his resignation, the yield spread has narrowed to around 73 basis points in recent weeks.