European financial markets were shocked by the sudden resignation of French Prime Minister Sébastien Lecornu less than a month after being appointed, and just hours after announcing a new cabinet line-up.
The move raised concerns about the country's political stability and the future of its fiscal policy.
The latest crisis stems from the government's failure to form a strong majority in Parliament after snap elections last year, causing Lecornu's efforts to form a unity government to come to a standstill.
Formation of New Cabinet Opposed
The cabinet he announced received opposition from the conservative party Les Républicains, which withdrew its support because it felt the line-up was too similar to the previous government and did not bring significant changes.
The uncertainty comes as France faces serious fiscal pressure, with a debt ratio exceeding 100% of Gross Domestic Product (GDP) and an urgent need to implement budget reforms and reduce the deficit.
The government's fall has raised fresh doubts about Paris' ability to implement austerity measures and comply with European Union financial rules.
Impact on European Financial Markets
Following the resignation announcement, the CAC 40 index in Paris plunged, while French government bond yields rose as investors demanded a higher risk premium.
The yield differential between French and German bonds widened, reflecting growing concerns about the country's fiscal stability.
The euro also weakened against the US dollar as investors fled to safe havens.
Market analysts saw the fall as a sign of a loss of confidence in France's ability to maintain consistent economic policies in a fragile political environment.
