French President Emmanuel Macron attends a press conference after a special summit of European Union leaders to discuss Ukraine and European defense in Brussels, Belgium on March 6, 2025.
Christian Hartmann | Reuters
Market attention turns to France again on Thursday after President Emmanuel Macron’s office said last night that he would appoint a new prime minister within the next 48 hours.
Macron thanked outgoing Prime Minister Sébastien Lecornu for his efforts in holding recent talks with various parties on whether there could be a way out of France’s ongoing political quagmire without holding new parliamentary elections, which would likely benefit the far right, which leads in opinion polls.
With Lecornu’s departure confirmed, Macron now turns to the difficult task of choosing a prime minister who can find a compromise with rivals over the state budget and the urgent task of reducing France’s deficit and debt pile.
Ideally, Macron would like to see hard-won reforms, In particular, the unpopular pension reformIt has been left alone but there have been rumblings that it may need to be amended or scrapped altogether, as a means of reaching a compromise between a new minority government and other parties – particularly the Socialist Party, seen as a kingmaker – who may be willing to support a new prime minister, but at a high price.
The National Assembly building in Paris, France, Monday, October 6, 2025. French Prime Minister Sebastien Lecornu resigned Monday morning, just one day after President Emmanuel Macron formed a new government that has been widely criticized. Photographer: Nathan Lin/Bloomberg via Getty Images
Bloomberg | Bloomberg | Getty Images
As with many things in French politics over the past year, arguments are already emerging, with the centre-right Republicans party saying it does not want there to be any review of pension reform.
“In any way, there has to be a political solution at some point,” Eric Chaney, an economic adviser to the Montaigne Institute and former chief economist at AXA, told CNBC, but he said freezing or canceling pension reform would be costly, in more ways than one.
“First, there will be a budget cost of about 13 billion euros ($19.6 billion) a year if this pension reform is frozen,” Chaney told CNBC’s Charlotte Reed in Paris on Thursday.
“The second reason is that one of the main points of the pension reform is to raise the retirement age to 64 (from 62), which is not that much compared to other European countries, and it has allowed the labor market participation rate of older people to rise… So if you abolish that, you will have less production, less GDP, less tax revenue for the government,” Chaney said.
He added, “But the third reason is more important, which is the political reason, because if you cannot achieve any pension reform, what kind of reform can you achieve in this country? This will be a disaster.”
Plus ça change…or not?
Macron is being urged not to choose another centrist ally as prime minister in light of Lecornu’s resignation or the ouster of Francois Bayrou and Michel Barnier, whose governments were brought down by rival parties and a no-confidence vote last year.
There is hope that by selecting a candidate who is not from Macron’s ill-fated and unpopular political group, the budget may have a better chance of passing.
This is crucial for the eurozone’s second-largest economy, which has the third-largest debt pile after Greece and Italy. France’s budget deficit reached 5.8% of GDP in 2024.
Nabil Melali, portfolio manager at Edmond de Rothschild Asset Management, told CNBC on Thursday that Macron may be tempted to choose a more “neutral” or technocratic figure this time around.
“Maybe after the trial of three people from the center right, he will choose a more neutral figure to lead a technical government whose only mission is to vote on any kind of budget before the end of the year,” Milali said.
“There are at least two difficulties in this scenario – first of all, finding this rare gem, a political figure who is neutral enough for both left and right. The second is that concessions still have to be made to the Socialist Party, which remains the kingmaker in the current National Assembly, and the main sticking point remains pension reform.”
However, Milali warned that any cancellation of the pension reform would be costly for Macron, as it is the only real structural reform during his second term in office and a key part of his political legacy, and for France in terms of financial market reaction.
Not budging from the far left or the far right?
After Lecornu’s resignation on Monday, Macron asked him to hold final 48-hour talks with rival parties to see if there was a way out of the political stalemate that has ravaged France for months and brought down successive minority governments.
Specifically, Lecornu was looking to see if there was a way to avoid dissolving parliament and calling new parliamentary elections.
Lecornu said on Wednesday evening that those talks showed that the majority of lawmakers opposed dissolving parliament and that a “platform for stability” existed. Earlier in the day, he also said he believed it would be possible to come up with a budget for 2026 by the end of the year.
Macron and his centrist bloc are keen to avoid new elections because the elections are likely to benefit Marine Le Pen’s anti-immigration National Rally party. It is currently the leader Voter pollsHe received about 32% of the votes compared to 25% of the votes obtained by the leftist coalition, the New Popular Front.
Head of the National Rally parliamentary bloc, Marine Le Pen, speaks to the press upon her arrival at her party’s headquarters in Paris, on October 6, 2025.
Thomas Samson | AFP | Getty Images
Given the polls and the smell of blood, both the far left and the far right are calling for new elections, believing they can tempt voters to vote decisively this time after inconclusive elections last summer. Macron called for this in an attempt to gain “clarity” but instead achieved nothing but become a source of the ongoing crisis that continues to plague France today.
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