France\u2019s prime minister S\u00e9bastien Lecornu has resigned less than a month after his appointment, prompting a market sell-off amid concern about dysfunction in the Eurozone\u2019s second-biggest economy.<\/p>\n
Mr Lecornu, a long-serving ally of French president Emmanuel Macron, submitted his resignation on Monday morning, the \u00c9lys\u00e9e Palace said, making him the shortest-serving prime minister since the Fifth Republic was established in 1958 and heaping pressure on the president.<\/p>\n
\u201cOne cannot be prime minister when the conditions are not met,\u201d Mr Lecornu said in a televised address, accusing other parties in France\u2019s fractured parliament of failing to compromise.<\/p>\n
His resignation came after his allies in the conservative Les R\u00e9publicains party indicated they could withdraw from his government because of dissatisfaction with some ministers he planned to include from Macron\u2019s Renaissance party.<\/p>\n
The leftwing Socialist party also threatened to vote the government down unless Mr Lecornu suspended Macron\u2019s signature pension reforms.<\/p>\n
His departure as prime minister is likely to make it even harder for France to put a budget in place by the end of the year, damaging the country\u2019s ability to tackle its deficit, set to be 5.4 per cent of GDP in 2025.<\/p>\n
\u201cThe governability of France is declining,\u201d said Jean-Fran\u00e7ois Robin, global head of research at French bank Natixis CIB.<\/p>\n
\u201cIn terms of public finances, it means less consolidation. No caretaker prime minister will have the majority to cut significantly into public spending.\u201d<\/p>\n
Mr Lecornu was the third prime minister appointed by Macron since snap parliamentary elections in summer 2024, a vote that left the French assembly bitterly divided and has made governing almost impossible. All three have now left office.<\/p>\n
The president now faces the difficult challenge of either naming another prime minister who is likely to encounter the same difficulties as Mr Lecornu and his predecessors, or calling new parliamentary elections.<\/p>\n
French markets fell on the news, with the Cac 40 stock index down as much as 2 per cent on Monday morning, led by declining shares in the country\u2019s big banks, which are likely to be hit hard by any shock to the French economy.<\/p>\n
Jordan Bardella, president of the far-right Rassemblement National, which is already the largest party in the assembly and is leading in French polls, urged Macron to call elections in response to the crisis.<\/p>\n
\u201cWe have no other possibility but to return to the French people because, once again, the longer we wait, the more we play with the stability of the country and the anguish of our compatriots,\u201d he said.<\/p>\n
Far-left leader Jean-Luc M\u00e9lenchon described Macron as \u201cthe origin of the chaos\u201d and called on him to resign to enable fresh presidential elections, a move the president has repeatedly ruled out.<\/p>\n
A fall in government bond prices pushed up the country\u2019s 10-year borrowing costs, while the euro fell against the dollar.<\/p>\n
\u201cThe only way to stop this crisis is to have a new election,\u201d said Emmanuel Cau, head of European equities strategy at Barclays. \u201cIt\u2019s making Europe hard to invest in and creating an excuse for investors to tread carefully.\u201d<\/p>\n
He added: \u201cThe market has to think about the far right being in a position to capitalise.\u201d<\/p>\n
The additional interest rate paid on French debt over benchmark German Bunds \u2013 a closely watched measure of market worries \u2013 went close to its highest level since the Eurozone debt crisis more than a decade ago.<\/p>\n
Mr Lecornu had promised a \u201crupture\u201d with previous Macron governments but announced a slate of ministers from his predecessor\u2019s cabinet, as well as some from earlier Macron administrations.<\/p>\n
One particularly controversial choice for Les R\u00e9publicains was Mr Lecornu\u2019s decision to give the defence ministry to former finance minister Bruno Le Maire, a Macron stalwart under whose watch the French deficit rose substantially. <\/p>\n
Bruno Retailleau, the R\u00e9publicains\u2019 leader, said there had been a \u201cproblem of trust\u201d.<\/p>\n
By contrast with previous Macron administrations, Mr Lecornu had vowed that he would not use a constitutional tool that enables the government to force through laws without submitting them to a parliamentary vote.<\/p>\n
But he said that opposition forces had not recognised this \u201cprofound rupture\u201d, adding that \u201cpartisan appetites\u201d had emerged from parties within the governing coalition, in a veiled criticism of Les R\u00e9publicains.<\/p>\n
\u201cI was ready for compromise. But each political party wants the other political parties to adopt the entirety of their programme,\u201d he said. \u201cOne must always prefer one\u2019s country to one\u2019s party.\u201d <\/p>\n
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