The Prime Minister of France, Sébastien Lecornu, resigns after just 27 days in office.
6 OCT, 2025
By Joanna Piwko from RankiaPro Europe
The French Prime Minister, Sébastien Lecornu, has presented his resignation to President Emmanuel Macron, just 27 days after taking office and only hours after announcing the composition of his new Government.
The Prime Minister's resignation marks the beginning of a new stage of political uncertainty in France, according to Flavien del Pino, head of BDL Capital Management for Spain. "Although a ministerial readjustment with less controversial profiles was expected, resignation was not among the most likely scenarios, despite the difficulties that were already anticipated from his appointment just a month ago", says Del Pino.
For Peter Goves, head of Sovereign Debt Analysis for Developed Markets at MFS IM, it is plausible that Macron will appoint a new Prime Minister. In that scenario, "it is not clear whether he will opt for another centrist profile, one closer to the left or perhaps a technocratic figure; in any case, the underlying issues remain the same: how to pass a budget in a deeply fragmented parliament", Goves emphasizes.
His fleeting mandate, the shortest in the history of the Fifth Republic, is a reflection of the deep political crisis that the country is going through, without clear majorities in the National Assembly and with the constant threat of censure motions from the opposition. For Del Pino, it seems unlikely that the President of France will resign; however, neither a new dissolution of the National Assembly nor the appointment of a Prime Minister with a more left-leaning orientation can be ruled out. "This last scenario would reopen the possibility of additional fiscal measures on companies, a factor that we continue to monitor with special attention in our portfolios". As for our investments, we maintain our positions unchanged, since we had already reduced our exposure to French companies at the beginning of the year", declares the expert.
Lecornu explained that he made this decision upon realizing the impossibility of governing, citing as main reasons the absence of minimum political conditions, the refusal of parties to cooperate, and the rigidity in negotiations among the different forces of the political spectrum. In his own words, "you cannot be prime minister when the conditions are not met". The attempt to form a center-right coalition government failed due to resistance from both the opposition and some historical allies, especially the conservative party The Republicans, whose leader threatened to leave the coalition due to the lack of sufficient weight of his formation in the Executive.
The reaction of the opposition was immediate. Both the left and the far right announced their rejection of the new cabinet, considering it a "continuity government" and devoid of social and parliamentary support.
For the opposition parties, "this is further proof that Macron's affiliated groups cannot lead Parliament, so there will be increased calls for new elections, new elections would further reduce President Macron's control, so appointing another prime minister may be his preferred option", says Alex Everett, senior investment director at Aberdeen Investments. However, the dissatisfaction expressed by almost all parties makes it clear that there is very little interest in reaching a consensus: "at this time, we see few reasons for political optimism, as even the relative status quo of a new prime minister would probably only incite even more anger from the opposition parties", concludes Everett.
Impact on the markets
For Peter Goves "the situation is clearly very fluid and it is uncertain what will happen exactly next, this is one of the reasons why OAT-Bund spreads remain wide and could widen even further". According to the expert from MFS Investment Management, for now, it is mainly a French internal matter, with limited contagion effects to the entire euro zone. "Our main conclusion is that, under these circumstances, it is difficult to argue for a significant narrowing of the OAT-Bund spread in the short term", he declares.
It is clear that greater political uncertainty does not help market sentiment. This morning, "the spreads between French treasury bonds, the OAT (Obligations Assimilables du Trésor) and German bonds have approached the historical highs of December 2024, which we consider fair, as it reflects the increase in electoral risk", asserts Alex Everett.
