“In Reality, It’s All Over”: French Socialists Threaten To End PM Lecornu’s Term (Again) Over Budget Showdown

The French blue-chip CAC 40 is lower on the session, and the spread between 10-year French and German yields has widened, signaling that the political turmoil is far from over.

On Friday, France’s Socialist Party threatened to sink Prime Minister Sébastien Lecornu’s minority government as soon as next week unless the 2026 budget includes 15-20 billion euros in additional taxes. Without Socialist support in parliament, no-confidence motions would likely pass, toppling the government.

“If in the coming hours, basically until next Monday, there is no clear change to the text, there would be no margin for maneuver on the budget bill or the social security bill, so it would in reality all be over,” Socialist leader Olivier Faure stated on the 24-hour French news television channel BFM television, earlier today.

S’il n’y a pas d’évolution sur les budgets de l’État et de la Sécurité sociale pour plus de justice sociale et fiscale d’ici lundi, les socialistes voteront contre et censureront ce gouvernement.

On ne peut pas demander aux retraités, aux malades, aux jeunes, aux classes… pic.twitter.com/GK79MMXn5F

— Olivier Faure (@faureolivier) October 24, 2025

Bloomberg noted, “The threats from the Socialist party chief come as the group treads a tricky line between getting more out of Lecornu on fiscal plans while avoiding fresh elections. The ouster of yet another premier would likely result in a snap legislative vote, in which polls suggest Socialists would fare poorly.”

At the beginning of the week, UBS analyst Simon Penn told clients that Lecornu “might not make it until year-end.” With how things are going this week, he might not make it until the end of next week.

Here is what Penn told UBS clients:

French PM Lecornu Might Not Make It Until Year-End

Political advisory group Forefront isn’t convinced French Prime Minister Lecornu will remain in office until the end of the year.

His basic problem is the same one that each of his predecessors has faced – he is going to struggle to pass a budget.

The Socialists were clear last week: they were willing to lend their support to get Lecornu through confidence votes, but that didn’t mean they supported his budget proposals. Forefront noted that the first thing Lecornu will need to do is enact the suspension of pension reform. He might be able to get that through the National Assembly, but the right-leaning Senate is opposed. If it fails in the Senate, it will go to a joint committee, and since that has a center-right bias, a decision to suspend pension reform will likely hinge on a raft of other requirements. This brings it full circle – the National Assembly is unlikely to accept those.

Odds on the cryptocurrency-based prediction market Polymarket show 13% that Lecornu is out by the end of next week. About 12 hours ago, these odds were 4%. Odds for Lecornu’s ouster by the end of the year jumped from 37% to as high as 51% on Friday.

In regional bond markets, France’s 10-year yield premium over Germany widened to 81 basis points on Friday, the highest in 10 days, according to Bloomberg data. This remains below the 89 basis point peak during Lecornu’s resignation, but it indicates that markets are beginning to price in greater uncertainty ahead of next week.

Modest selling pressure on CAC 40…

And next week may bring fireworks in French politics.