What You Need to Know About... The Lecornu II Government and the Impact of Politics on the Markets

Lecornu begins his second term. The time elapsed since his resignation was so short that we barely had time to feel his absence.

Now that we are starting to glimpse some solutions, it seems right to take a step back and answer THE question: what exactly happened?

We retrace the entirety of the events through this unusual (and perhaps slightly repetitive?) timeline, detailing the peaks and troughs that were provoked by all these changes of course.

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It comes and it goes...

So, what should we remember?

June 9, 2024

Let's take a step back. On June 9, 2024, the dissolution of the National Assembly by the President had already sent shivers through the markets, creating a climate of uncertainty in France. Following the announcement, the Euro immediately sagged against the US Dollar. The prospect of cohabitation with a more high-spending economic program, such as those put forth by the Rassemblement National or the Nouveau Front Populaire, prompted investors to sell European assets and seek refuge in values deemed safer.

This retrospective is essential to better understand why, after more than a year of turbulence and such a short tenure for a government, the markets' reaction to the resignations was not one of patience, but one of immediate sanction.

September 9, 2025

Let's return to us, and more precisely to him: Sébastien Lecornu. He was appointed Prime Minister on September 9, 2025, succeeding François Bayrou, who had been toppled by a no-confidence vote in the National Assembly.

Nevertheless, the Paris Stock Exchange continued its progression in the days following the announcement. The CAC 40 quickly rose after the opening to a high of 7786.77, compared to 7666.54 the day before and the previous Friday. Interest rates saw only slight tension: a technical adjustment, rather than genuine stress.

October 5, 2025

Here we are, a month later, getting a taste of the fully formed Lecornu government. The markets remained relatively stable. Very few oscillations: all quiet on the Western Front, or perhaps the calm before the storm?

October 6, 2025

Surprise, surprise—we learned it through different headlines across all French and international press—only 14 hours after the government was formed (his acceptance of the post was no longer an issue), Sébastien Lecornu submitted his resignation to the President, who was compelled to accept it.

And the investors? They, too, did not hesitate to flee. The resignations, which prolonged the agony of instability, reignited concern for the Forex market and cast doubt on the country's ability to pass a Finance Bill.

The Euro then plummeted to its lowest level in over a month against the US Dollar, edging close to the symbolic 1.156 mark. Interest rates spiked. With every Lecornu retreat, investors further inflated their risk premium for a French State with no one to look after its accounts.

October 10-12, 2025

Macron's four days of deliberation following the resignation led him to choose a comparable, even equivalent, replacement: Lecornu himself.

A double appointment in less than a week, however, was unprecedented.

The market remained volatile and cautious, awaiting clearer signals.

Lecornu's reappointment was viewed by some as a lack of breakthrough and a mere prolongation of the crisis. By others, it was seen as a moment to grant their trust to a man of duty and love for his country.

Setting aside the romanticism, the Paris Stock Exchange saw some fluctuations. Following the late announcements, it pulled back but managed to limit the damage by recovering lost ground—particularly when the Prime Minister's statements hinted at a possible path to adopting the budget.

October 13, 2025

Between no-confidence motions, censures, and negotiation efforts, the latest news does not seem all that appealing to the markets.

Last Wednesday opened with a speech by Sébastien Lecornu that did not leave the markets indifferent.

The pension reform, desired by Macron, which raised the retirement age from 62 to 64, had been approved in 2023. Yet, Lecornu announced: it will remain unchanged until January 2028.

Was this a way to gain clarity and find new allies within the Socialist Party? Whatever the case, it is true that La France Insoumise and the Rassemblement National had tabled two no-confidence motions...

... and someone was already whispering about a Lecornu III...

October 16 - 21, 2025

Ultimately, the strategy seems to have paid off. Lecornu escaped the no-confidence vote from LFI and the fall of his new government, thus avoiding a possible third "cloning." The support of the Socialist Party, clearly, played a major role.

French discontent has already come knocking at the door with the news of the absence of inflation revaluation for 2026 and various cuts. These concern pensions and social benefits, but also tax advantages for households, and schemes like MaPrimeRénov’ and the CPE. Lecornu's plan aims for 30 billion euros in savings next year, a measure that should, at the very least, reassure the markets.

Where will the other cuts be made, and what else should we expect from the 2026 budget?

We leave you with these questions, not (or not only) to keep you hooked on Keewe's next articles about current events, but mainly because these are THE questions to ask yourself to successfully carry out your international operations right now.

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