New French Prime Minister Sebastien Lecornu has announced the abandonment of a plan proposed by his predecessor to cut two public holidays as part of budget measures aimed at reducing the national deficit. This decision follows a significant downgrade by the credit rating agency Fitch Ratings, which lowered France’s sovereign credit rating to A+, marking the country’s lowest level on record. In remarks to local newspapers La Provence and Ouest France, Lecornu stated, “We are paying for the instability.”
The downgrade by Fitch adds pressure on Lecornu just days after he assumed office on September 10, 2023. He is currently working to form a cabinet while drafting a budget for 2026 that must navigate a deeply divided parliament. Lecornu has emphasized his commitment to finding “creative ways” to collaborate with political rivals to secure approval for a debt-reducing budget, while also signaling new policy directions.
“My mindset is simple: I want neither instability nor stagnation,” Lecornu said in his first interview since taking office. He acknowledged that the upcoming budget may not fully align with his principles, stating, “In fact, that’s almost certain!” He called for “modern, frank and high-level parliamentary discussions” with the Socialist Party, the Ecologists, and the Communist Party.
Lecornu’s appointment follows a tumultuous week for President Emmanuel Macron, who selected him as the fifth prime minister in less than two years after lawmakers ousted veteran centrist François Bayrou in a confidence vote. This vote was prompted by Bayrou’s proposals for a budget squeeze amounting to €44 billion (approximately $A78 billion). Lecornu now faces the daunting challenge of passing a streamlined budget through parliament, a task that has previously led to the resignation of two prime ministers.
The pressure on French debt has intensified since Bayrou’s confidence vote, causing borrowing costs to rise close to those of Italy, which has the eurozone’s second-highest debt burden and a considerably lower credit rating. Lecornu remarked, “When interest rates rise, they have a direct impact on the state’s finances, but also directly on the lives of households and businesses. That is why the government will have to propose to parliament to maintain a sound financial trajectory for France. It is also a question of sovereignty.”
As Lecornu embarks on his leadership journey, the political landscape remains precarious, with significant challenges ahead in navigating fiscal policy and maintaining stability within the French government.
