The fall of the Bayrou government has triggered a surge in France's risk premium, which has now surpassed Italy's.

ParisThe day after the confidence issue that has brought down the French government and has worsened political instability, France's risk premium has surpassed Italy's. It has climbed to 3.473 points, making it the highest in the eurozone. The French risk premium is only 0.2 points higher than Italy's, but it is a overtaking Very symbolic, it shows that the markets don't like political instability.

Now all eyes are on the President of the Republic, Emmanuel Macron. He is responsible for making the move to break the political impasse. And he doesn't have much time: the clock is ticking because the new prime minister only has one month to prepare a new draft budget for 2026, which should be approved before the end of the year. The country's difficult economic situation –with sky-high debt and a deficit far above what Brussels allows– make the arrival of a new government urgent.

Macron is aware of this, and on Monday evening, shortly after Prime Minister François Bayrou lost the vote of confidence in the National Assembly, the Élysée Palace issued a statement saying that the president intends to appoint a new head of government very quickly, "within a few days." Bayrou must submit his resignation early Tuesday afternoon to the head of state, and consultations at the Élysée Palace to find a new prime minister could begin in the coming hours.

The head of state has few options and must make a difficult choice. There are few possible scenarios, and none guarantees an end to the instability: either he appoints a new prime minister from a party or he opts for a technocrat. The other scenario would be the dissolution of the National Assembly and the calling of early legislative elections, an option that Macron is not currently considering, according to those close to him.

Possible scenarios for Macron

Macron could bet on adding the moderate left to the government and appointing a new prime minister from a party like the Socialists, which has not yet governed since last year's legislative elections, although the left-wing bloc, which presented itself united as the New Popular Front, won the electionsLa France Insoumise (LFI) refuses to govern without an exclusively left-wing government, but the Socialists could be more flexible.

The party is demanding a chance. "What I want is for the left and the environmentalists" to be in government, said Socialist leader and possible candidate for prime minister, Olivier Faure, in an interview with France Inter on Tuesday. "We must reclaim power and make this possibility a reality," he emphasized.

The president has explored this option in recent days, but the problem is that the right would not support a left-wing government. Hence, Macron could ultimately opt for a more centrist figure, from his own party. The names most mentioned this Tuesday are the current Minister of Defense, Sébastien Lecornu, who is very close to the president, and the Speaker of the Assembly, Yaël Braun-Pivet, also a Macronist.

Also on the table is the possibility of appointing a technocratic government, one without political affiliation. The great difficulty in finding a prime minister who is not a technocrat is that there is a high chance of being censured by a highly fragmented Assembly, where no single bloc commands a sufficient majority to prevent a government from falling. The fact that there have been four prime ministers in the last three years perfectly illustrates the complicated situation. A technocratic government, on the other hand, could manage the country until new legislative elections are held.

There would still be one last option, which is what Jean-Luc Mélenchon's rebels are demanding: the president's resignation. The left, considered radical in France, points to the president as the culprit of all the country's ills and demands Macron's departure and the immediate calling of presidential elections. However, the occupant of the Élysée Palace wants to complete his term, which is his last. Citizens, on the other hand, overwhelmingly support Macron's resignation. According to a poll published Tuesday by BFMTV, 64% of French people want the president to back down.