Can a new prime minister resolve the French budget deadlock?

After French Prime Minister Lecornu resigned on Monday, President Macron asked him to find a way forward with the opposition parties. The outgoing prime minister concluded that it is still possible to reach an agreement on the 2026 budget. President Macron will appoint a new prime minister in the next two days. This reduces the political uncertainty of potential elections. It may thus lower French risk premia in the near term. But the 2026 budget is still unfinished, and the necessary compromises could come at the cost of debt sustainability.