France is facing renewed political instability as the government risks collapse, causing notable declines in French stocks and bonds. Investor sentiment has been adversely affected, with French bond yields rising sharply and the risk premium surpassing that of Greece and Portugal, and approaching levels seen in Italy. This elevated risk perception has led to French government debt being priced similarly to that of Lithuania and Slovakia. Despite the bond market's reaction, French stocks have not fully reflected the extent of these troubles, as noted by Citi. The political uncertainty is also impacting individual companies, with Eiffage experiencing a drop on the Paris stock exchange amid disappointing profitability and heightened political risk. The potential government collapse is raising concerns about economic stability and fiscal consolidation in France.