French president Emmanuel Macron gave his outgoing prime minister, Sébastien Lecornu, until Wednesday night to negotiate with France’s political parties in a last-ditch effort to prevent the country from falling deeper into crisis.
Lecornu unexpectedly resigned early on Monday, blaming the intransigence of antagonistic political groups – including Macron’s centrist minority – for their failure to agree to a new cabinet, which was unveiled Sunday evening.
Late on Monday Macron said he had entrusted Lecornu “with the responsibility of conducting final negotiations by Wednesday evening in order to define a platform for action and stability for the country,” according to a statement from the president’s office.
The decision to give Lecornu another shot at finding a path out of France’s political impasse buys a little more time for Macron to figure out his next steps, which could include fresh legislative elections that opposition groups are clamouring for. It’s not clear what Macron will do once the Wednesday deadline passes.
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Successive French governments have struggled to hold on to power since Macron’s ill-fated gamble on snap elections last year further hobbled his own centrist group and split the National Assembly into irreconcilable blocs.
Deputies in the lower house forced the resignation of both the previous premiers – Michel Barnier and François Bayrou – over budget plans, and were preparing to do the same to Lecornu as soon as this week.
The deadlock has already thwarted attempts to rein in what has become the largest budget deficit in the euro zone, fuelling sell-offs of French assets and driving up the country’s borrowing costs relative to peers.
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The latest collapse means the government will struggle to meet the deadline to file a budget by October 13th, making it likely emergency measures will be needed to avoid a shutdown in January.
France’s yield premium over German 10-year debt closed at about 85 basis points on Monday, the highest since early January. In the spring of 2024, before Macron called elections, the gap was as low as 43 basis points.
“At the request of the President of the Republic, I have agreed to hold final discussions with the political forces for the sake of the country’s stability,” Lecornu said in a post on social media. “I will tell the Head of State on Wednesday evening whether this is possible or not, so that he can draw all the necessary conclusions.”
Political observers see diminishing chances that Macron can avoid calling another parliamentary election. According to Antonio Fatas, professor of economics at business school Insead, the decision to appoint a cabinet on Sunday that was made up nearly entirely of the same ministers as the prior one was “deadly”, as it angered all sides.
“He is cornered,” Fatas said. “I cannot imagine a combination of support given the little willingness Macron has shown to compromise.”
Since Lecornu’s appointment last month, France’s credit rating has been downgraded by two agencies on concerns the political situation will hamper any government’s capacity to repair public finances. Moody’s Ratings is scheduled to update its assessment October 24th.
Activity indicators also show the uncertainty has taken a toll on the wider economy as consumers and businesses hold back on investment and spending.
Patrick Martin, the president of France’s largest business federation, Medef, warned that the economic downturn was already under way.
“Investments in France are declining, whereas we should be – as is happening in all other advanced countries – accelerating in digitalisation, decarbonisation, and competitiveness,” he said. “At some point, there must be a collective awakening among policymakers to grasp this deteriorating economic situation.”
Following Lecornu’s attempt at talks in the next two days, Macron will still have three main choices: he can name a new prime minister, who would then propose a fresh cabinet; he could call a parliamentary election; or he could resign himself – something he has previously said he won’t do.
In the immediate aftermath of Lecornu’s announcement that he was quitting, far-right leader Marine Le Pen reiterated her call for fresh legislative elections as her National Rally party sees an opportunity to build on the gains it registered in the last snap vote in 2024.
“We’ve come to the end of the road,” Le Pen said. “We need to go back to voters. They must decide.”
Eric Ciotti, head of a right-wing group allied with her National Rally, said those parties had agreed at a meeting Monday they would censure any government proposed by Macron.
The far right’s hardened position means Lecornu’s only path to restoring stability is to broker some kind of accord between the centre left and the centre right. Both of those groups, along with Macron’s centrists, would need to refrain from no-confidence votes at the National Assembly if any government is to survive.
However, those two parties – the Socialists and the Republicans – are long-standing political rivals whose opposition dominated French politics for decades before Emmanuel Macron was elected as a centrist in 2017.
The two parties remain deeply divided on policy, with the Republicans opposing Socialist calls for smaller budget cuts and increased taxes on business and the wealthy. The left has so far refused to join any government led by Macron’s centrists, while the Republicans have served in cabinets for the last year.
Bruno Retailleau, the head of the Republicans and the outgoing interior minister, said on Monday that the left shouldn’t run the government. “It’s out of the question to endorse a left-wing government and prime minister.”
Late on Monday, Olivier Faure, the head of the Socialist Party said on TF1 television that left-wing parties should form the next government.
