Lecornu Government Faces Political Turmoil and Economic Challenges

On October 5, 2025, Prime Minister Sébastien Lecornu formed France's third government in a year, immediately confronting significant political and economic obstacles. The cabinet comprises eighteen ministers, including the unexpected reappointment of Bruno Le Maire as Minister of the Armed Forces, a move that stirred controversy within the Republicans party, leading its president Xavier Bertrand to call for his party's withdrawal from the government. Notably, prominent politicians such as Édouard Philippe and Gabriel Attal declined roles in Lecornu's administration, signaling dissent within political ranks. Meanwhile, Interior Minister Bruno Retailleau voiced concerns that the cabinet fell short of the promised break from the past. This political instability has weighed on the stock market, with the CAC 40 dropping 0.64% and major French banks experiencing sharp declines.

Economically, the new government faces the challenge of harnessing modest growth projected at 0.6% to 1% for 2025 amid a fragile recovery. Household consumption remains positive yet subdued due to a high savings rate of 19%, with over €6 trillion locked in low-yield savings mechanisms. Business investment is stalled as firms await the upcoming 2026 budget details. Lecornu must balance fiscal prudence with reforms aimed at boosting tax revenues and reducing social spending, including unemployment benefits. Former Prime Minister François Bayrou highlighted the overarching political reluctance to confront these grave national issues, emphasizing the need for unity and realism to drive France forward. Parliamentary debates on budgetary and social policies are anticipated to be pivotal in shaping the government's direction.