France is plunged into a political crisis after the resignation of Prime Minister Sebastian Lecorni who resigned just 24 hours after the new government was announced by President Emanuel Macron, causing French bonds to fall and markets to be very worried.

In particular, Lecornie’s resignation came as a surprise, a day after Macron unveiled his new cabinet, which retained almost all the key figures from previous governments. The choice infuriated opposition parties calling for a “break” with the past, and even Interior Minister Bruno Retailleau accused the French president of “refusing to change course.”

Markets react

The political turmoil led to a fall in French government securities, with the yield on the 10-year bond rising nine basis points to 3.6%. The yield spread over German bonds topped 89 basis points – the highest level since late 2024 – suggesting increased fiscal risk.

Three scenarios for Macron

According to Bloomberg, after Lecornie’s departure, Macron has three options:

Considering the choice, he has three options.
– appoint a new prime minister and present a new cabinet,
– call a general election
– or resign himself, which he has publicly ruled out.

The deadline for submitting the budget is October 13, making it almost certain that emergency measures will be triggered.

At the same time, the head of the National Rally, said that “there can be no stability without a return to the polls and the dissolution of the National Assembly.”