France has plunged into fresh political turmoil after Prime Minister Sébastien Lecornu resigned less than a month after taking office — just hours after unveiling his cabinet — making it the shortest-lived government in modern French history.
Lecornu, France’s fifth prime minister in under two years, said it was “impossible to govern” with rival parties refusing to compromise on budget reforms. His resignation leaves President Emmanuel Macron facing one of his toughest crises yet, with opposition parties calling for snap elections or his resignation.
Political Collapse Amid Budget Deadlock
Lecornu was tasked with passing France’s 2026 budget, which includes spending cuts and tax hikes to reduce a 5.8% deficit and debt at 113% of GDP, far above EU limits. But a deeply divided parliament blocked progress, with both left and right parties threatening no-confidence votes.
“There’s no majority, only egos,” Lecornu said during his resignation speech.
Macron, who has already seen three minority governments fall since 2024, now faces the choice of naming a sixth prime minister, calling new elections, or risking a prolonged stalemate.
Markets Slammed: Euro and Bonds Slide
The resignation rattled financial markets:
- The CAC 40 index fell nearly 2%, led by bank losses.
- The euro dropped 0.7% to $1.1665.
- The spread between French and German 10-year bonds widened to 87 basis points, the largest since January.
- The 10-year OAT yield rose to 3.6%, while the 30-year hit 4.44%.
“French banks are getting hammered,” said Carlo Franchini of Banca Ifigest. “The situation is politically and economically fragile.”
IG Group analyst Chris Beauchamp warned that the crisis could spread beyond France: “Investors are now wary of European assets amid rising uncertainty.”
Macron Under Fire
Far-right leader Marine Le Pen said “Macronism is dead,” demanding he “dissolve parliament or resign.” Far-left figure Jean-Luc Mélenchon called for Macron’s impeachment, while conservatives said new elections may be the only way forward.
Macron has remained silent so far, seen walking alone along the Seine as France’s leadership vacuum deepens.
Economic Risks Rising
France’s debt and deficit remain far above EU rules, with rating agencies Fitch and Moody’s warning of further downgrades. Economists fear a leadership void could raise borrowing costs and pressure the eurozone’s stability.
“The worst outcome would be Macron stepping down,” said John Plassard of Cité-Gestion. “It would create a power vacuum at a critical moment for Europe.”
France is once again without a functioning government, and markets are losing patience. Unless Macron stabilizes the situation quickly, the crisis could evolve from a political breakdown into a financial one, threatening confidence across Europe.
Paris is leaderless, markets are shaking, and Macron’s next move may decide whether France calms the storm — or drags Europe deeper into it.
