Business and Financial Sectors React with Concern to Sébastien Lecornu’s Resignation Amid Political Instability
The business community and financial markets express deep concern over the economic impacts of Prime Minister Sébastien Lecornu's resignation and ongoing political instability in France.
- • Entrepreneurs are anxious and frustrated by political instability following Lecornu’s resignation.
- • France’s CAC 40 index fell 1.36%, and bond yields rose amid investor concerns.
- • Experts warn the crisis reflects deeper financial troubles and political deadlock in France.
- • Superficial government changes are unlikely to resolve France’s political and fiscal challenges.
Key details
The resignation of French Prime Minister Sébastien Lecornu on October 6 has sent ripples of concern through both France's business community and financial markets, highlighting the economic risks tied to the current political instability.
Bernard Cohen-Hadad, president of the Confederation of Small and Medium Enterprises (CPME) in Ile-de-France, reported a surge in calls from worried entrepreneurs. He described the mood as “stunned” and expressed widespread frustration with the “stop-and-go” nature of recent policies. Just three days before Lecornu’s departure, CPME had celebrated a government decision lowering value-added contribution for businesses—a move seen as a victory for entrepreneurs. Now, the sudden political shift has unsettled many in France’s business sector who desire much-needed policy stability (Research ID: 89610).
Financial markets also reacted negatively to the news and the ongoing political uncertainty, marking France’s third government collapse in ten months. The CAC 40 index dropped 1.36%, falling below 8,000 points for the first time since March, with banking stocks such as Société Générale, Crédit Agricole, and BNP Paribas posting steep declines. The yield on ten-year French government bonds rose to 3.57%, and the spread between French and German bonds hit its highest point since December 2024—signals of heightened risk perception. Meanwhile, the Euro briefly slipped below 1.17 dollars before a minor rebound. Economists, including Léo Barincou of Oxford Economics, warned that a possible dissolution of the National Assembly and extension of the 2025 budget into 2026 could worsen France’s budget deficit, further undermining market confidence. Allianz GI’s Matthieu de Clermont remarked on the difficulty of markets grappling with the absence of political solutions to stabilize France’s fiscal outlook (Research ID: 89609).
Dominique Reynié, professor at Sciences Po and director of the Fondapol think tank, analyzed the resignation as a manifestation of deep political deadlock rooted in France’s dire financial situation. He asserted that appointing a fourth prime minister or dissolving the government would be superficial fixes unlikely to resolve the underlying crisis. Reynié emphasized that crucial government decisions require unpopular choices, and the absence of clear electoral options leaves governance mired in avoidance. His assessment underscores a broader risk that France’s political turmoil could escalate into a serious regime or state crisis (Research ID: 89627).
In summary, Lecornu’s resignation has intensified fears among entrepreneurs and investors alike, as uncertainty clouds the economic and political landscape. While the government and political class grapple with difficult decisions, businesses and markets remain wary of further instability and policy unpredictability.