Political Turmoil: France’s Le Maire Resigns Hours After Prime Minister Steps Down

Update (1240ET): 

France’s former finance minister, Bruno Le Maire, who was appointed head of the Ministry of the Armed Forces on Sunday, announced his resignation less than 24 hours after taking the job, amid ongoing political turmoil that rattled stocks and bonds in Paris on Monday. 

Bloomberg noted, “President Emmanuel Macron’s decision late Sunday to return Le Maire to a ministerial post, in charge of defense, sparked a political backlash, including from within the administration.” 

By Monday evening, Le Maire wrote on X that President Macron accepted his resignation and expressed hope that his departure would help efforts to form a new government, reaffirming his ongoing commitment to serving France and the public interest:

My decision to join the government was taken solely out of a sense of duty, in grave geopolitical circumstances, to serve France and the French people.

I note that my decision is provoking incomprehensible, false, and disproportionate reactions in some quarters.

No individual situation must block the proper functioning of the country and our institutions.

Under these conditions, I proposed to the President of the Republic at the end of the morning to withdraw from the government without delay and to transfer my responsibilities as Minister of the Armed Forces to the Prime Minister.

The President of the Republic has accepted my proposal.

I hope that this decision will allow discussions to resume with a view to forming a new government, which France needs.

My commitment to serving France and the French people will always be guided by concern for the general interest and the State.

Ma décision de rejoindre le gouvernement a été prise uniquement par esprit de mission, dans des circonstances géopolitiques graves, pour servir la France et les Français.

Je constate que ma décision provoque chez certains des réactions incompréhensibles, fausses et…

— Bruno Le Maire (@BrunoLeMaire) October 6, 2025

Earlier, Interior Minister Bruno Retailleau criticized the decision to reinstate one of Macron’s close friends, arguing that appointing Le Maire, who had served as finance minister for seven years, did not represent a viable path forward. 

Political turmoil erupted early Monday when French Prime Minister Sébastien Lecornu resigned, citing the inability of political parties to reach a compromise, saying that “each party wanted the other to adopt its entire program.”

Commenting on the political turmoil and its spillover effects in local equity and bond markets, UBS analyst Matthew Cowley provided clients with an overview of the situation, potential pathways for Macron, and related trade ideas.

UBS economist Felix Hüfner highlights heightened political instability in France following Prime Minister Sébastien Lecornu’s resignation, just weeks into his tenure. President Macron faces three scenarios: appointing a new PM, dissolving parliament for legislative elections, or even calling an early presidential election—though the latter remains unlikely.

UBS sees scenario one as most probable, but election risks have increased, impacting investor sentiment. Prolonged uncertainty could delay the 2026 budget and weigh on growth, with household savings already at a four-year high.

UBS retains its short 10y France vs EUR swaps strategy, citing elevated election risk and potential downgrades by Moody’s and S&P. Investors may find opportunities if 30y France yields rise above 4.50%, with France’s constitutional safeguards ensuring budget continuity. Watch for key announcements from Macron and upcoming rating reviews later this month.

More commentary:

The crisis in France is about 3 things: (i) a political center that’s desperately trying to keep right-wing populism out of gov’t; (ii) broken Euro zone fiscal incentives that enable bad policy; (iii) a global rise in debt post-COVID. Long-term yields are up sharply everywhere… pic.twitter.com/TfIEohKE7z

— Robin Brooks (@robin_j_brooks) October 6, 2025

Wonder what Brigitte Macron is up to at the moment. Here’s a look back at earlier this year…

🚨 Noway did Brigitte Macron just punch Emmanuel Macron live on camera as they landed in Vietnam.

Two Men representing France fighting upon arrival is not the best look. pic.twitter.com/igl6RLtB9o

— Concerned Citizen (@BGatesIsaPyscho) May 26, 2025

Hmm.

Over the weekend, both Czechs and Japan elected their own version of Trump, while the Macron establishment regime imploded for good

— zerohedge (@zerohedge) October 6, 2025

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French Prime Minister Sébastien Lecornu abruptly resigned on Monday morning, just three weeks after his appointment, preempting what appeared to be an inevitable ousting. Lecornu was expected to unveil his policy agenda before the National Assembly on Tuesday, but both the Socialist Party and the National Rally had warned that without a drastic policy shift, they would trigger a no-confidence vote. French bonds and stocks slumped on the emerging political crisis. 

President Emmanuel Macron’s office issued a one-sentence statement, confirming that Macron had accepted the resignation of Lecornu. This comes amid turmoil over the composition of his cabinet, a coalition of centrists and conservatives. 

Lecornu told reporters his resignation was primarily due to the inability to compromise across the political spectrum: “I was ready to compromise, but each political party wanted the other political party to adopt its entire program.”

He told reporters in the courtyard of the Matignon Palace, the prime minister’s headquarters, that he had spent weeks trying to forge a viable path forward with politicians, unions, and social partners from both political sides, but had achieved no breakthroughs. 

Jean Garrigues, one of France’s top political historians, told local media that Macron will likely be forced to dissolve the National Assembly once again. 

“A fresh dissolution might lead to an increase of seats for the National Rally in the lower house, but it’s unlikely that they’ll get an outright majority,” Garrigues stated in the interview. 

UBS analyst Simon Penn provided clients with the three possible pathways for Macron to move forward: 

1. He can try another technocrat type

2. He can call a general election

3. He can quit and call a full presidential election

The Bloomberg Economics team provided readers with the visualization. 

Penn warned that France is entering a dangerous political environment:

French PM Lecornu has resigned less than a month after he was appointed (Sept. 9). On face value Lecornu looks to have quit before he was forced out. He was due to present his policy proposals to the National Assembly on Tuesday, but leaders of the Socialist and National Rally had already warned that unless there was a total change in direction they would call a vote of no confidence immediately after Lecornu stopped speaking.

Furthermore, the press and public reaction to the appointment of a near unchanged cabinet from the Bayrou administration has been somewhat scornful. President Macron has attempted three times to try for the same policies and failed three times. As the famous quote from Jean-Claude Juncker goes: “We all know what to do, but we don’t know how to get re-elected once we have done it.”

The latest failure puts French politics into very dangerous territory – more so than the markets seem to be pricing. The lessons of the UK in the 1970s are worth bearing in mind – a government in the early 70s attempting what today would be described as austerity; failing and being replaced by socialist policy, that today might be described as populist. It took mass strikes, power blackouts and an IMF bailout before UK voters were willing to accept the necessary medicine that came in the form of the 1979 Thatcher government.

Meanwhile, across other Wall Street desks this morning, analysts are desperately trying to make sense of the political turmoil and what comes next. Barclays analysts expect parliamentary elections, adding that a Macron resignation is “unlikely.”

Political turmoil sent the CAC 40, the benchmark French stock market index, down 1.5% by early afternoon trading in Paris. French bonds also dropped. 

More market commentary from UBS analyst Justinus Steinhors: “The Euro Stoxx 50 falls 80bp, retreating from highs. Yields jump on political turmoil: in France, PM Lecornu resigns after less than four weeks in office.”

Alexandre Baradez, chief market analyst at IG in Paris, warned, “What’s new this morning is the beginning of contagion from France to the rest of the European banking sector. The drop of the sector is 100% linked to France. Given that banks have outperformed the markets so much, all the elements are aligned for some profit-taking on these stocks.”

Allianz CIO and Chief Economist Ludovic Subran told Bloomberg that it’s not the time to panic.

“I think the concern is what kind of budget France is going to get”

Allianz CIO and Chief Economist Ludovic Subran says Sebastien Lecornu’s resignation as Prime Minister is “absolutely not” a Liz Truss moment for France https://t.co/EM4CPWJ1vt pic.twitter.com/vEb8utW36h

— Bloomberg TV (@BloombergTV) October 6, 2025

Lecornu’s resignation makes him the shortest-serving prime minister in the history of France’s Fifth Republic, founded by Charles de Gaulle in 1958.

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