Euro Slides as Le Pen Attacks Barnier's Budget

Marine Le Pens far right National Rally party has threatened a vote of no confidence, should Prime Minister Michel Barnier not make amendments to his recent budget policies, setting an ultimatum for changes to be made by the end of the day to avoid the call of a no-confidence vote. The move to topple the French government has been lambasted by Finance Minister Antoine Armand who in defiance said that his administration will not be blackmailed.

French stocks took a hit in early trading this morning with the CAC 40 dropping 1.5% already, with yield premiums to hold French debt over German bonds also expanded to 86 basis points. The EUR has weakened vs most majors also as investors react to the political uncertainty which keeps European markets under pressure. President Macrons decision to hold a snap election in late summer saw the lower house split into a ferocious three-way split, with a leftist alliance against Le Pen’s far right, Macron was left with downtrodden centrist support.

The US Dollar has continued its recent strength as the outlook for US interest rate cuts dwindle. President-elect Trump was in the headlines once more accusing BRICS nations of conspiring to replace the Greenback with another currency. Despite a guilty plea from his son back in September, President Biden has managed to issue an official pardon for his son Hunter who looked set to face jail this month for felony gun and tax convictions. Trump hit back calling the pardon an “abuse and miscarriage of justice”.

On the home front, UK house prices have once more shown robustness rising more than expected for November, growing at their fastest annual pace for two years, with property values close to record highs. Despite the fallout from the recent budget, mortgage approvals remain near pre pandemic levels. However, the CBI has stated that it expects business activity to shrink as the ￡26 billion increase to payroll tax hits sentiment across the private sector, with companies expected to cut jobs and rein in investment, with hiring plans at their weakest since covid for many companies.

Russian and Syrian warplanes hit back at Islamist rebels in Syria after attacks on Aleppo over the weekend in the biggest threat to Bashar al-Assad’s regime in years, who has vowed to crush the uprising.

We start the month of December with a raft of PMI data from Europe and the UK this morning, Wednesday sees both BOE Governor Bailey and ECB President Lagarde speaking, we cap the week off with the all important non farm payroll figure on Friday.

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