French premier signals optimism on solving political crisis

William Horobin and Jenny Che, Bloomberg News on Oct 8, 2025

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PARIS – Outgoing French Prime Minister Sebastien Lecornu expressed optimism that an accord can be reached to allow the formation of a new government without fully endorsing a new proposal to rethink a controversial pension law as demanded by the Socialists.

“The good news is that with all the consultations I have had,” Lecornu told reporters Wednesday, “there is a desire to have a budget for France before Dec. 31.” He added that meetings with left-wing parties today would allow him “to see what concessions they want from other political groups in order to guarantee this stability.”

French bonds initially advanced as Lecornu spoke, before paring gains. That left the yield on 10-year bonds down four basis points at 3.53%, narrowing the spread over German bunds to 84 basis points. The country’s CAC 40 stock index was up 0.6% on the day.

Separately, Elisabeth Borne, who pushed through a 2023 increase in the minimum retirement age as prime minister, said she was open to a suspension of that law if it meant bringing stability to the country.

“If this is the prerequisite for the country’s stability, we must examine the terms and consequences of suspending the reform until the debate that will take place during the next presidential election” in 2027, Borne said in an interview with Le Parisien newspaper published late Tuesday.

Offering to suspend the law that increases the minimum retirement age to 64 from 62 would be a major concession to the Socialist Party, opening an avenue for a left-leaning government and allowing Macron to avoid calling fresh legislative elections.

After meeting with Lecornu on Wednesday, Socialist lawmakers welcomed the premier’s announcement of a slower pace of fiscal consolidation. But they cautioned they have no guarantees yet on pensions until Lecornu and Macron meet later in the day.

“At this moment, we have no assurances on the reality of this suspension,” Socialist Party leader Olivier Faure said. “We will continue to fight for guarantees, and the best guarantee is that the left and the greens are called upon to govern.”

Macron on Monday asked Lecornu to have one last attempt — with a deadline of Wednesday evening — to bring together opposing parties to give France “stability” as a budget is urgently needed to curb a growing debt burden and reassure investors.

While Lecornu told reporters that reducing France’s deficit was “key” for France’s credibility on financial markets, he opened the door to smaller budget cuts next year — another core demand of the Socialists. He said the budget gap should still fall below 5% of GDP next year, while he previously put the target at 4.7%.

The National Rally’s Marine Le Pen said she would vote to oust any government that emerges from current talks. “I’m censuring everything, this needs to stop, the joke’s lasted long enough,” she said.

That narrows Lecornu’s room to maneuver since the far-left France Unbowed has also said it would oppose any government linked to Macron.

Lecornu didn’t explicitly discuss the pension law in his five-minute address Wednesday morning. He noted that the goal of getting a budget by the end of the year “distances the prospect of a dissolution” of the National Assembly and “requires that everyone have the capacity to move forward.”

“Investors may actually take the view that it could lead to political stability and an end to the deadlock,” Andrea Tueni, head of sales trading at Saxo Banque France, said before Lecornu’s comments “I would tend to think that the big picture is that this is an acceptable alternative to new elections or Macron resigning.”

Borne, who is currently outgoing education minister, said her reform had become a “hostile topic” in France. “The discussions led by Sebastien Lecornu aim precisely to avoid a dissolution” of the National Assembly, she said.

Suspending the pension reform would complicate France’s efforts to rein in what has become the largest deficit in the euro area.

Outgoing finance minister Roland Lescure said the cost would be hundreds of millions of euros as soon as 2026 and billions the following year.

“I’m ready to make concessions, but they will have a cost that needs to be financed,” Lescure said on France Inter radio on Wednesday.

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—With assistance from Julien Ponthus and David Goodman.