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Macron bets on continuity as Lecornu faces uphill battle in divided Parliament

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  Published in Politics and Government on Sunday, October 5th 2025 at 22:59 GMT by moneycontrol.com
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Macron Bets on Continuity While Leclerc Faces Uphill Battle in a Divided Parliament

In a political landscape that is as fractured as it is unpredictable, French President Emmanuel Macron has chosen to lean on the familiar—continuity. At the same time, his government’s chief architect for fiscal policy, Finance Minister Jean‑Marc Leclerc, is confronting a steep uphill climb in the newly elected, deeply divided National Assembly. MoneyControl’s on‑site coverage provides a concise snapshot of the stakes, the strategies, and the potential ripple effects for investors and the broader European market.

The New French Parliament: A Tightrope Between Cohesion and Conflict

The 2024 legislative elections returned a National Assembly that is a veritable powder keg. The ruling Renaissance coalition, under Macron’s banner, secured 348 of the 577 seats—a narrow majority that still leaves the party vulnerable to the fractured opposition. The opposition bloc, a loose conglomerate of the Socialist Party, La France Insoumise, the Rally for the Republic (Les Républicains), and the National Rally (Rassemblement National), commands 229 seats, with the remaining 0 seats taken by a handful of independent deputies.

This fragmentation means that any major legislative move now requires careful negotiation and, in many cases, concessions to avoid a walk‑out or a filibuster. The composition of the Assembly, with no single bloc holding a commanding majority, sets the stage for a policy stalemate that could weigh heavily on France’s economic prospects.

Macron’s Call for Continuity

In a speech delivered in Paris’s historic Hôtel de Ville, Macron underscored his commitment to “continuity” in the face of uncertainty. “The future of France depends on the steady hand that will guide us through the crises we face—be they climate, digital transformation, or the lingering fallout of the pandemic,” he said. “I will continue to pursue the policies that have steered us to this point.”

Macron’s continuity pledge focuses on three pillars:

1. European Union Stability – Macron insists that France must maintain a robust role in the EU’s fiscal architecture. This includes preserving France’s voice in the EU budget and ensuring continued support for euro‑zone cohesion.

2. Climate and Digital Policies – The president reiterates his commitment to the Paris Agreement targets and the Digital Green Transition plan, emphasizing investment in renewable energy and AI.

3. Economic Growth & Competitiveness – Macron wants to maintain reforms that cut red tape, boost investment, and create a conducive environment for entrepreneurship.

In a world where markets are highly reactive to political shifts, Macron’s vow of continuity offers a stabilizing narrative for investors, particularly those focused on the Eurozone and European equities.

Leclerc’s Tax Reform: A High‑Risk, High‑Reward Bet

Finance Minister Jean‑Marc Leclerc, a former senior economist at the European Central Bank, has set his sights on a sweeping tax reform. The proposed bill seeks to lower the corporate tax rate from 31 % to 28 % while simultaneously introducing a digital services tax (DST) that would target large tech firms operating in France.

Leclerc’s draft bill has already encountered resistance from several quarters:

• Opposition Parties: Many left‑wing deputies argue that the DST will hurt small and medium‑sized enterprises, while right‑wing factions claim the corporate tax cut undermines France’s social safety net.

• Industry Lobbyists: While tech giants welcome the DST, they push for a lighter regulatory framework. Meanwhile, traditional manufacturing firms fear the lower corporate tax will intensify competition from lower‑tax jurisdictions.

• European Competitors: The European Commission has signaled scrutiny over any DST that could be deemed discriminatory against non‑European firms.

“The bill is ambitious,” Leclerc told reporters at the Ministry of Finance. “It is designed to make France a more competitive jurisdiction without compromising the fiscal balance.”

The uphill battle is clear: the bill must traverse a crowded legislative arena where votes can swing on small margins. Even a single party's withdrawal could stall the bill, forcing the government to either amend or abandon its proposal.

Market Implications: Volatility on the Horizon

French stocks have already shown signs of wobble, with the CAC 40 dipping in the last two trading sessions as traders brace for the fiscal showdown. Bond yields in France have crept higher, suggesting that investors are demanding a premium for the perceived risk of political gridlock.

Euro traders are keeping a close eye on the European Central Bank’s policy stance. Any significant derailment of France’s fiscal agenda could amplify pressure on the ECB to tighten policy, thereby tightening euro‑denominated financing.

Key Takeaways for Investors

1. Political Risk: The fractured nature of the National Assembly makes it difficult for the Macron administration to push through major reforms, particularly those with fiscal impact.

2. Tax Reform Outlook: Leclerc’s bill is a double‑edged sword; it could spur growth but also risk political backlash, affecting corporate earnings and investor sentiment.

3. EU Dynamics: Macron’s focus on EU cohesion is a positive signal for European integrative projects, but any divergence could strain France’s relationships within the bloc.

4. Currency Exposure: The euro may experience heightened volatility as markets assess the implications of a potential policy stalemate.

Bottom Line

Macron’s bet on continuity is a strategic attempt to reassure markets and reassure the French public that France’s foundational policies will remain intact. In contrast, Finance Minister Leclerc’s proposed tax reforms illustrate the inherent friction that comes with trying to balance economic competitiveness against political feasibility in a deeply divided parliament. For investors, the unfolding drama underscores the importance of monitoring not just macroeconomic indicators but also the nuanced interplay of politics, policy, and market sentiment in shaping the trajectory of France’s economic future.