French Prime Minister Sebastien Lecornu Resigns After 27 Days
Sebastien Lecornu, appointed as France’s prime minister in early September 2025, resigned after less than a month in office, plunging the country into renewed political instability. Lecornu, who became the fifth prime minister in under two years, stepped down just hours after announcing a new cabinet on Sunday. Addressing the media from the Matignon Palace, Lecornu expressed frustration over the fractured parliamentary landscape. “Each political party is behaving as if they have their own majority in parliament,” he said. “The conditions were not fulfilled to stay in office.” He added that despite his willingness to compromise, opposing parties demanded full adoption of their respective programs, making governance impossible.
Deepening Political Fragmentation and Leadership Challenges
Lecornu’s resignation underscores the severe political fragmentation in France’s parliament, which has struggled to coalesce around a stable governing majority since the inconclusive elections of mid-2024. His departure marks the shortest tenure of any French prime minister in the Fifth Republic, highlighting the difficulty of managing a divided legislature. A former defense minister and close ally of President Emmanuel Macron, Lecornu was unable to rally sufficient support to pass the 2026 state budget, a critical task given France’s pressing fiscal challenges. The government faces a budget deficit projected at 5.8% of GDP for 2024, well above the EU’s 3% limit, alongside a public debt load exceeding 113% of GDP.
Market Reactions and Economic Concerns
The resignation triggered immediate negative responses in financial markets. The yield on France’s 30-year government bond (OAT) surged to a one-month high of 4.441%, while the 10-year benchmark yield climbed to a 10-day peak of 3.599%. The CAC 40 index fell by 1.6%, and the euro depreciated 0.7% against the US dollar. These market movements reflect investor anxiety over France’s ability to pass a viable budget and maintain fiscal discipline amid political deadlock. The country’s recent Fitch credit rating downgrade and the prospect of a Moody’s downgrade add further pressure on government finances.
Political Fallout and Calls for Macron’s Resignation
The political fallout has been swift. The far-right National Rally declared on social media that “Macronism is dead on its feet” and urged President Macron to either dissolve parliament or resign. Meanwhile, Jean-Luc Mélenchon, leader of the far-left France Unbowed party, called for Macron’s impeachment, citing Lecornu’s resignation as a catalyst. Analysts warn that ongoing instability could further undermine governance. John Plassard, head of Investment Strategy at Cite-Gestion, told CNBC that France appears “ungovernable,” with political factions unwilling to make tough decisions. He noted that the worst-case scenario for markets would be Macron’s resignation, which could trigger a prolonged period of uncertainty and possibly snap elections.
Rising Bond Spread Signals Growing Risk
The spread between French and German 10-year government bonds—a key indicator of sovereign risk—currently stands at 87 basis points. A further widening could signal increased investor concern about France’s fiscal stability, posing significant challenges for the country’s borrowing costs and economic outlook.
FinOracleAI — Market View
Sebastien Lecornu’s resignation after a mere 27 days in office highlights the deep political fragmentation crippling France’s government. The inability to pass a credible 2026 budget exacerbates fiscal risks amid already elevated debt and deficit levels, raising concerns among investors and rating agencies alike.
- Opportunities: Potential for political realignment if new leadership can forge broader consensus; market correction could present buying opportunities.
- Risks: Continued political deadlock risks delaying budget approval, increasing borrowing costs and prompting further credit rating downgrades.
- Rising bond yield spreads indicate growing investor wariness, potentially impacting France’s ability to finance its debt sustainably.
- Heightened political uncertainty may depress investor confidence and weaken the euro further.
- Calls for Macron’s resignation or snap elections could trigger prolonged instability with unpredictable economic consequences.
Impact: The resignation intensifies France’s political and economic uncertainty, posing downside risks to market stability and fiscal sustainability in the near term.
