French Prime Minister Resigns, Triggering Fresh Political and Market Turmoil

France has been thrown into renewed political crisis after Prime Minister Sébastien Lecornu resigned less than 24 hours after forming his new cabinet.

‍The surprise decision comes only weeks after Lecornu was appointed, making his government one of the shortest in modern French history.

Lecornu had been tasked with a difficult mission: restoring confidence in President Emmanuel Macron’s leadership and persuading a deeply divided parliament to approve France’s 2026 budget.

His resignation now leaves the country without a clear path forward, deepening a sense of political instability that has been building for months.

A Government in Crisis

Lecornu, a former defense minister and longtime ally of Macron, faced immediate challenges when he entered office.

His newly formed cabinet was an uneasy coalition of centrists and conservatives, and disagreements reportedly began almost as soon as it was announced.

Public frustration had already been mounting after several previous governments failed to pass budgets that balanced spending cuts and tax increases. France has now cycled through five prime ministers in less than two years, a pace of turnover that has undermined both domestic confidence and international credibility.

The French presidency confirmed Lecornu’s resignation on Monday, adding that President Macron had accepted it. The president now faces pressure from opposition parties to call snap parliamentary elections, a move that could reshape France’s political landscape just as it prepares for crucial economic reforms.

‍Market Reactions

‍Financial markets responded sharply to the political uncertainty.

• The yield on France’s 10-year government bond climbed to a 10-day high of 3.6 percent, indicating higher perceived risk for investors holding French debt.
• The 30-year bond yield briefly touched a one-month high before easing slightly.
• The CAC 40 index, France’s main stock market, fell by nearly 2 percent on Monday.
• The euro dropped 0.7 percent against the US dollar, reflecting investor concerns that instability in France could ripple through the wider European economy.

Traders say markets are likely to remain volatile in the coming days as investors watch whether Macron can quickly install a new government capable of restoring confidence.

‍The Economic Stakes

‍France is already facing significant fiscal challenges. The country’s budget deficit reached 5.8 percent of GDP in 2024, while total public debt climbed to 113 percent of GDP - both far above the limits set by the European Union.

Without a functioning government, passing a credible 2026 budget may prove nearly impossible.

Economists warn that prolonged political paralysis could weaken France’s position within the EU, push borrowing costs even higher, and dampen investor sentiment across Europe. Some analysts also note that uncertainty in France, the eurozone’s second-largest economy, could make the European Central Bank’s job harder as it tries to manage inflation and growth.

‍What to Watch Next

‍President Macron now faces one of the most serious challenges of his political career.

After already overseeing three minority governments, his ability to form a stable coalition is in doubt. If he fails to do so, early elections could follow - an outcome that markets generally dislike because it extends uncertainty. For investors, the key questions are how quickly a new prime minister can be appointed and whether

France’s next government will commit to fiscal discipline.

Until then, analysts expect cautious trading across European markets, with particular focus on French bonds, bank stocks, and the euro