French President Emmanuel Macron attends a press conference after a special summit of European Union leaders to discuss Ukraine and European defense on March 6, 2025 in Brussels, Belgium.
Christian Hartmann | Reuters
Market attention shifted again to France on Thursday after President Emmanuel Macron announced last night that he would name a new prime minister within the next 48 hours.
Mr Macron thanked outgoing Prime Minister Sébastien Lecorne for his efforts to find a way out of France’s ongoing political quagmire without holding new parliamentary elections that are likely to benefit the far-right, which is leading in opinion polls.
With L’Ecornu’s resignation now certain, Macron has embarked on the difficult task of choosing a prime minister who can find compromises with his rivals on the national budget and the urgent task of reducing France’s deficit and debt mountain.
Ideally, President Macron would like his hard-won reforms, especially the unpopular pension reform, to be left alone, but there are rumors that they may need to be tweaked or scrapped altogether as a way to reach a compromise between the new minority government and other parties, particularly the Socialist Party, which is seen as the kingmaker. They may support a new prime minister, but the cost will be high.
Monday, October 6, 2025 at the National Assembly Building in Paris, France. French Prime Minister Sébastien Lecornu resigned on Monday morning, a day after President Emmanuel Macron appointed a widely criticized new cabinet. Photographer: Nathan Lane/Bloomberg via Getty Images
Bloomberg | Bloomberg | Getty Images
As with many things in French politics over the past year, debate over this issue has already emerged, with the center-right Les Ripucants party saying it does not want any overhaul of pension reform.
Eric Cheney, economic advisor at the Montaigne Institute and former chief economist at AXA, told CNBC that while “there has to be a political solution at some point,” freezing or canceling pension reform would be costly in many ways.
“First of all, if this pension reform were frozen, there would be a budget cost of about 13 billion euros (about $19.6 billion) a year,” Cheney told CNBC’s Charlotte Reid in Paris on Thursday.
“The second reason is that one of the key points of 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 participation of older people in the labor market to rise… So if you remove it, you will reduce output, you will reduce GDP, you will reduce tax revenue for the government,” Cheney said.
“But the third reason is even more important, and it’s a political one, because if we can’t reform pensions, what reform can we have in this country? That’s a disaster,” he added.
Are there changes in addition to that…or not?
Mr Macron has been urged not to choose another centrist ally as prime minister in light of Lecorne’s resignation and the ouster of François Baillou and Michel Barnier, whose government was toppled last year by rival parties and a no-confidence vote.
There are hopes that choosing a candidate other than from Mr Macron’s own unlucky and unpopular political background may improve the chances of a budget being agreed.
This is crucial for the eurozone’s second-largest economy, which has the third-largest debt mountain after Greece and Italy. France’s budget deficit will be 5.8% of gross domestic product (GDP) in 2024.
Nabil Mirali, portfolio manager at Edmond de Rothschild Asset Management, told CNBC on Thursday that Macron may be tempted to choose a more “neutral” figure or technocrat this time.
“Perhaps after trying three people on the centre-right, he will choose someone more neutral to lead a professional government whose sole mission is to vote on any kind of budget by the end of the year,” Mirari said.
“There are at least two difficulties in this scenario. The first is to find this rare talent, a politician who is sufficiently neutral to both the left and the right. The second is that concessions will have to be made to the Socialist Party, which remains the main figure in the current parliament. And the main bottleneck remains pension reform.”
But Mr Mirari warned that scrapping pension reform would be costly for Mr Macron. This is the only real structural reform of Macron’s second term in government, an important part of his political legacy, and also costly for France in terms of financial market reaction.
Is there a break away from the far left or far right?
After Lecornu resigned on Monday, President Macron asked him to hold 48 hours of final talks with rival parties to see if there was a way out of the political impasse that has plagued France for months and toppled successive minority governments.
Specifically, Lecorne was looking for ways to avoid dissolving parliament and holding new parliamentary elections.
Lecorne said on Wednesday night that the meeting showed that a majority of MPs were against dissolving parliament, and that there were “foundations for stability”. On the same day, he also expressed his belief that it would be possible to enact the fiscal year 2026 budget by the end of the year.
Mr Macron and his centrist allies hope to avoid another election as the result is likely to benefit Marine Le Pen’s anti-immigration party, Rally National. Voter opinion polls currently show the party leading with about 32% of the vote, compared to the left-wing New Popular Front’s 25%.
On October 6, 2025, Marine Le Pen, leader of the Rassembrement National Assembly, speaks to reporters upon arriving at party headquarters in Paris.
Thomas Samson | 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 encourage voters to vote boldly this time after last summer’s inconclusive election. These were called by Macron to gain “clarity” but instead achieved nothing and became the root of the ongoing crisis that still plagues France today.
