The 'Olympics truce' in France has ended, bringing political tensions back to the surface.

• The political truce initiated by French President Emmanuel Macron is coming to an end, resulting in the return of the country's fragmented political environment.
• One analyst predicted that Macron's appointment of a new prime minister may result in deadlock due to the "unprecedented" circumstances.
• With the 2025 budget approval in the near future, there are concerns about how a divided parliament will reach a consensus on any legislation.

The "Olympic political truce" declared by French President Emmanuel Macron in late July is about to expire, bringing the country's rocky political landscape back into focus.

The snap legislative election held in July, prior to the Paris World Cup, resulted in a hung parliament, with no party or alliance achieving a majority. The left-wing New Popular Front alliance gained the most seats and thwarted a potential triumph for the far-right National Rally.

In recent weeks, the country has been mostly brought together through a shared sportsmanship.

Politicians have ceased their usual squabbling, and a caretaker government remains in place. The National Assembly's next session will not begin until October 1st, lasting nine months.

Despite his party's electoral defeat, Macron will remain president until 2027.

Prime minister tussles

Who will Macron appoint as the new prime minister, who leads the French government, nominates ministers, and instigates legislation, after the resignation of his ally Gabriel Attal?

The little-known candidate nominated for the role by New Popular Front, Lucie Castets, has not been commented on by Macron.

Although theoretically free to appoint anyone to the role and with no obligation to choose a candidate from the party with the most seats, an unpopular choice could be ousted by a vote of no confidence in parliament. Macron cannot dissolve the National Assembly and call another election for another year.

The new parliament's division makes the situation "unprecedented" and could lead to a "dead-end," according to Elsa Clara Massoc, assistant professor of International Political Economy at the University of St. Gallen.

"During the previous legislature, Macron did not have an absolute majority but still had more support than the Left today. He could rely on the Conservatives' backing to avoid a censure motion," she said in an email to CNBC.

The New Popular Front has only 178 seats, which is far short of the 289 needed for a majority, and its candidate Castets is likely to be rejected by other parties.

No party will form an alliance with far-right National Rally, as Macron's own politics and allied government have been widely rejected by the French, and even within the leftist grouping, parties are divided and some will refuse any sort of alliance with centrists, according to Massoc.

The right-wing Les Republicains may agree to a "passive majority" with the center, but they are hesitant to give up their unique identity, according to Massoc, and opposition in parliament will remain high.

The 2025 budget approval is uncertain due to the divided parliament, as seen in Macron's use of a special constitutional power to pass the 2022 spending bill.

The debate over how to address France's significant debt burden and whether to reverse flagship Macronist policies such as increasing the national retirement age is likely to be intense.

The French parliament has limited power under the country's political system, with 65% of laws adopted between 2017 and 2022 being proposed by the government rather than parliament, according to Massoc.

Since the election on July 7, the French index has dropped by more than 4.5%. However, analysts believe that a divided parliament could result in greater stability in the stock and bond markets, as it may prevent the implementation of some parties' more populist policies.

The 2027 presidential race is a top priority for political parties, but few will want to take on the responsibility of cutting public spending to address the public deficit, according to Renaud Foucart, a senior lecturer in economics at Lancaster University, who spoke to CNBC by phone.

Macron's strategy is to prolong the uncertainty as much as possible, he stated.

Macron, despite being a "lame duck" leader at home, will likely be content to focus on international affairs and attempt to impact European politics, according to Foucart.

"He accomplished his goal of transforming the labor market and deregulating the economy with his project," he stated.

Eurasia Group's managing director for Europe, Mujtaba Rahman, stated in a Monday note that Macron has experienced both triumphs and setbacks but has received minimal recognition for his domestic achievements, such as lowering unemployment.

While the left wing emphasizes the reduction of taxes for the wealthy and criticizes the French welfare system, the right wing highlights the high immigration rates and rising crime rates.

Rahman stated that Macron's vision of a stronger France in a stronger Europe did not resonate with a majority of French voters.

Rahman stated that instead of leading France to a prosperous future as promised, Macron has steered the country into a political quagmire with an unstable government, a significant budget deficit, and a staggering 3 trillion euros ($3.28 billion) in accumulated debt.

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