"France's political crisis shows no sign of abating. The resignation of Sebastien Lecornu as prime minister this week, after just 27 days in office, means the country is set to have an eighth prime minister in the space of five years. Although President Emmanuel Macron now looks set to name another prime minister before the week is over potentially fending off the need for new elections the political turmoil comes with major consequences for the EU's second-largest economy."
"As happened in 2024, it means the 2026 budget may not be agreed in time to be debated and passed by the end of the year. Last year, the budget was "rolled over" into 2025 due to political instability, meaning the old budget was used until a new budget was finally agreed in February. Although that short-term solution prevents the risk of a US-style government shutdown, it does nothing to deal with France's long-term economic problems, namely its debt and public finances."
Political instability in France continues, with Sebastien Lecornu resigning after 27 days and the country set to have its eighth prime minister in five years. President Emmanuel Macron is expected to appoint a new prime minister soon, but repeated leadership changes jeopardize timely approval of the 2026 budget. The 2025 budget was previously rolled over due to instability, delaying substantive fiscal adjustments. Rating agencies have issued warnings: Fitch downgraded France to single A and S&P stressed the need to comply with EU Stability and Growth Pact rules. Public spending and tax cuts since 2017 pushed national debt up by over €1 trillion; debt-to-GDP rose to 114% from 101%.
#french-political-instability #budget-and-public-finances #sovereign-debt-to-gdp #credit-rating-downgrades
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