French equities and government bonds sold off on Tuesday after Prime Minister François Bayrou said he would ask the National Assembly for a vote of confidence on 8 September, raising the prospect that his minority government could fall. The benchmark CAC 40 slid more than 2 percent to its lowest level in almost three weeks, with banking heavyweights BNP Paribas and Société Générale each losing more than 6 percent. Mid-cap shares dropped nearly 3 percent. In fixed income, the yield on 10-year French OATs briefly climbed to 3.53 percent, widening the gap over equivalent German Bunds to about 79 basis points, the largest since April. Bayrou is seeking parliamentary support for a €44 billion package of spending cuts aimed at containing a budget deficit that reached 5.8 percent of gross domestic product last year—almost double the European Union’s 3 percent limit. The three main opposition blocs have already signalled they will vote against the motion, fuelling speculation that President Emmanuel Macron may have to appoint a new premier or call snap elections if the government loses. Finance Minister Éric Lombard said he was “not resigned” to defeat and would lobby lawmakers ahead of the vote, but investors warned that prolonged political uncertainty could drive French risk premiums higher, particularly if Marine Le Pen’s National Rally gains ground in any subsequent election.