The euro tumbled by more than 0.5% on Monday, slipping below $1.167 — its lowest level since September — as markets reacted to renewed political instability in France following Prime Minister Sébastien Lecornu’s resignation.
Lecornu stepped down shortly after President Emmanuel Macron unveiled a largely unchanged cabinet, a move that triggered backlash from opposition parties. The resignation further complicates Macron’s efforts to maintain political control amid an increasingly divided parliament.
Lecornu, who had been appointed just weeks earlier, faced the daunting challenge of pushing through a 2026 fiscal plan that includes spending cuts and tax increases to rein in France’s ballooning deficit — currently the largest in the eurozone.
The French presidency confirmed that Macron accepted Lecornu’s resignation hours after announcing the new cabinet lineup. Analysts say the abrupt exit deepens France’s political uncertainty and adds downward pressure on the euro.
Macron’s decision to retain much of his previous cabinet sparked discontent across the political spectrum, with critics accusing him of ignoring calls for broader reform.
Lecornu’s departure mirrors the fate of his two predecessors — François Bayrou and Michel Barnier — both of whom were ousted by parliament in disputes over budgetary austerity measures.
France’s public debt has now climbed to a record level, making its debt-to-GDP ratio the third-highest in the European Union, after Greece and Italy. The ratio stands at nearly twice the EU’s permitted threshold of 60%.
In recent years, French governments have bypassed parliamentary votes to pass annual budgets using constitutional powers — a controversial but legal move condemned by opposition lawmakers. Lecornu, however, had pledged to restore parliamentary voting on the fiscal plan before stepping down.
France has struggled to maintain political stability since Macron’s risky decision to hold snap parliamentary elections last year, a move intended to consolidate his coalition but which instead left it in a minority.
The ongoing impasse now threatens to undermine France’s fiscal credibility and investor confidence, further weighing on the euro’s value in global currency markets.
