Political Crisis Puts Pressure on French Markets - French PM Lecornu Resigns Amid Budget Dispute, Sparking Market Uncertainty
French Prime Minister Sébastien Lecornu has resigned, sparking uncertainty in the country's political landscape. His departure comes amidst a budget dispute and rising borrowing costs, causing concern among investors.
Lecornu, originally a member of The Republicans, joined President Emmanuel Macron's Renaissance party in 2017. He was appointed as the fifth prime minister since Macron's re-election in 2022. His resignation follows a disagreement over the budget for the coming year, which is expected to include significant cuts to public spending.
The political crisis has had a ripple effect on the financial market. The yield on ten-year French government bonds briefly rose to 3.61 percent, nearing the 3.60 percent mark that could trigger massive attacks. This increase sent French bank stocks tumbling, with BNP Paribas, Société Générale, and Crédit Agricole losing significant value. Investors fear a domino effect on economic and fiscal policy, with the spread between French and German bonds reaching its highest level in nine months, indicating increased credit risk for France.
Lecornu's resignation has added to the political uncertainty in France. As the budget dispute continues, investors are closely watching the government bond yields and their impact on the financial market. The coming days will be crucial in determining the direction of France's political and economic landscape.
