Lionel Laurent And Marcus Ashworth Talk France's Deepening Crisis

Summary

Bloomberg Talks

Episode Title: Lionel Laurent And Marcus Ashworth Talk France's Deepening Crisis
Date: October 7, 2025
Guests: Lionel Laurent (Bloomberg Opinion columnist, Paris), Marcus Ashworth (Bloomberg Opinion columnist)
Host/Interviewer: Bloomberg

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Main Theme & Purpose

This episode delves into the deepening political and financial crisis in France, focusing on President Emmanuel Macron’s rapidly eroding position, the looming threat of snap parliamentary elections, market confidence (or lack thereof) in French assets, and the larger implications for the European Union’s stability. The episode features an insightful analysis by Lionel Laurent and Marcus Ashworth, who assess whether France risks a market meltdown similar to the UK’s "Liz Truss moment", and what the future might hold for French politics and the Eurozone.

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Key Discussion Points & Insights

1. The Political Crisis and Macron’s Last Stand

• Macron’s Strategy:
  Lionel Laurent opens by discussing Macron’s apparent last-ditch effort to avoid snap parliamentary elections, positioning them as almost inevitable due to collapsing support within Parliament and among key allies.
  • “The new rule of French politics is it’s not over till it’s over, but it feels over... Macron wants the Parliament to be pro- or anti-snap elections.” (Laurent, 00:47-01:47)
• Coalition Dynamics:
  Macron is forcing all centrist parties, especially the center-left, to choose between risking their seats in snap elections or attempting another unstable coalition. Energy and momentum are “slipping away hour by hour”.

2. Market Reactions and Bond Spreads

• French Bonds in Focus:
  Marcus Ashworth discusses the significance of widening French debt spreads, noting that while current levels (86 basis points) don’t signify crisis, a move above 100 would trigger market alarm.
  • “A sharper move above 100 would concentrate some people for sure…France is sort of on its own here… It’s a slow, gradual death.” (Ashworth, 02:03-03:17)
• No ECB Bailout, Just Avoidance:
  The ECB isn’t stepping in, and international investors are quietly backing away from French assets rather than selling outright; maturing bonds aren’t being rolled over.

3. France’s “Le Big Short” and Comparison to Past Crises

• Slow-Burning Political Risk:
  Laurent likens France to “Le Big Short”: a slow-moving political risk that markets can model out for now, but which threatens previously stable tax and pension reforms.
  • “Those two things are starting to crack because…all the parties around him, especially the far left, on the far right, want to brush those away…then you get back into old France…with a lot worse budget deficit.” (Laurent, 03:52-05:02)
• Historical Parallels:
  The situation is compared to the UK’s Liz Truss/Brexit saga.
  • “Liz Truss and Brexit are useful barometers of what happens when a country sort of tests its reputation…If the politics gets more radical…you could get a much worse economic situation...approaching a Truss moment.” (Laurent, 08:13-09:11)

4. Macron’s Allies and Rising Panic

• Allies Jumping Ship:
  Discusses key allies, Edouard Philippe and Gabrielle Atal, publicly distancing themselves, signaling that many politicians are already preparing for a post-Macron France.
  • “Backroom himself betrayed his predecessor…This is the rule of French politics.” (Laurent, 05:23)
  • “People are willing to push the boat out a little more in terms of radical proposals. Macron resignation would be a huge bombshell…” (Laurent, 05:51-06:21)

5. The Far-Right’s Economic Platform & Market Perceptions

• Labeling Le Pen:
  Ashworth notes that while media paint Le Pen’s Rassemblement National as “far right”, its economic stance is actually statist, even left-leaning – threatening pension and tax reforms.
  • “The media portrays Le Pen and her crew as far right, but in practice, [they’re] very far left, in socialistic terms…very friendly towards a wealth tax…running back that pension reform…” (Ashworth, 06:26-07:58)
• Market’s Base Case:
  For now, the market is betting against a radical shakeup before 2027, but the risk of disaster grows if the hard left or “Le Pen socialism” take power.

6. Structural Risks in French Bonds

• No Immediate "Truss Moment":
  Unlike the UK’s LDI (liability-driven investment) debacle, France lacks such a “structural idiosyncrasy”, but could face downgrades if more rating agencies strike. This would force some index funds to sell, feeding a slow-burn deterioration.
  • “When also they have this excessive deficit procedure…if France is no longer sufficiently rated double A and slips down...that again will be very much a slow burn.” (Ashworth, 09:24-10:43)

7. French Public Mood and Near-Term Outcomes

• Public Fatigue:
  Laurent reports widespread public disillusionment:
  • “Sick, tired, disgusted, fed up…There seems to be a nihilistic…view in society. Huge distrust of politicians, loss of faith in policy…dangerous for the future.” (Laurent, 10:54-11:30)
• What’s Next?
  Likely outcome is more “Hail Mary moves” by Macron, but snap parliamentary elections by year’s end or early 2026 appear almost inevitable.
  • “I do think parliamentary elections are the most likely outcome, if not the end of this year and start next year.” (Laurent, 11:35)

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Memorable Quotes & Notable Moments

• On French Political Momentum:
  • “The gravity I feel is slipping away hour by hour.”
    — Lionel Laurent (01:32)
• On Market Apathy Toward France:
  • “Why buy France? …it’s a slow gradual death.”
    — Marcus Ashworth (02:55)
• On Dissonance Among Macron’s Allies:
  • “Gabrielle Atal…saying on television last night, he doesn’t understand the President’s decisions anymore…Is everyone now just positioning themselves for the next set of elections?”
    — Interviewer (05:02)
• On the French Public:
  • “Sick, tired, disgusted, fed up, whatever you want...loss of faith in policy, disgust almost with the political class.”
    — Lionel Laurent (10:54)
• On the Risk of a “Trust Moment”:
  • “I am concerned that if the politics gets more radical…you could get a much worse economic situation…something approaching a Truss moment.”
    — Lionel Laurent (08:46)
• On Index Selling Risks:
  • “Index bond funds have to start selling because France is no longer sufficiently rated double A and slips down…that again will be very much a slow burn.”
    — Marcus Ashworth (10:09)

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Timestamps for Key Segments

• Macron’s Last Stand and Snap Election Dynamics: 00:30–01:49
• Bond Spread Widening & Market Reactions: 01:49–03:23
• Long-term Political Risk in France (“Le Big Short”): 03:23–05:02
• Allies Abandoning Macron: 05:02–06:22
• Far-Right (Le Pen) Economics & Market Implications: 06:22–08:05
• Comparisons to UK “Liz Truss moment”: 08:05–09:12
• Index Selling & Ratings Watch: 09:12–10:43
• Public Mood and What’s Next for France: 10:43–11:45

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Overall Tone and Takeaways

The episode maintains a tone of weary realism, with a well-founded anxiety about France’s political trajectory and its implications for markets, the Eurozone, and investor sentiment. Both guests agree that while there isn’t a full-blown fiscal emergency yet, the structure of French politics and the slow erosion of confidence point to increasingly dangerous territory—a classic case of a crisis unfolding in slow motion. Macron is seen as playing his last cards, with little support left, while the French public and political class brace for major upheaval, possibly led by Marine Le Pen or the far left.

Listeners come away with deep context for the headlines: what’s really at stake isn’t just this week’s parliamentary maneuvering, but the whole structure that has underpinned French—and, by extension, Eurozone—stability for decades.

Transcript

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[Interviewer]

Well, look, let's start with Lionel's latest piece about this, talking about Sebastian LeCorgne, who's supposed to be Emmanuel Macron's last chance man to keep his presidency on the rails through 2027. Is Sebastian LeCornu going to be able to do anything in the next 48 hours that he hasn't been able to do over the past monthly?

[Lionel Laurent]

And Al well, the new rule of French politics is it's not over till it's over, but it feels over.

[Interviewer]

It's nearly over.

[Lionel Laurent]

The reason why I say that is because I think that snap parliamentary elections, which has been something that Macron's been trying to avoid ever since he called the last one last year, that for me has dramatically ramped up in probability. So that to me looks like a very likely option. So what Macron's done is basically put that on the table and said, okay, this is basically happening, and you now have 48 hours to avoid that. Okay, so in other words, the dividing line of Parliament used to be pro or anti Macron willing to work with him or not. Now Macron wants the parliament to be pro or anti snap elections. So basically all the parties around Macron, especially the center left, have to basically decide are they going to risk their own jobs by letting parliamentary elections happen, or are they going to have one last, last, last attempt at a coalition. But frankly, all of the energy, all of the kind of gravity I feel is slipping away hour by hour.

[Interviewer (Marcus)]

Marcus, let me bring you in here because we've got the oats bunch spread now at 86 basis points. And what analysts keep telling me is this isn't a crisis yet, so how much would it have to widen for this actually to be considered a crisis in the bond market?

[Marcus Ashworth]

A Sharper move above 100 words would concentrate some, some people for sure. You know, the point here is that the ECB has some reserve weapons if it needs to transmission protracted instrument, which has never been tested and won't be under these circumstances. So in a France is sort of on its own here. But of course it's not because, and we've seen over all these various different blips, you can go back to the snap election last year, last sort of June, that really the cavalry gets, you know, the wagons get circled and Europe comes in to at least soften the blows. So yes, the ecb, no longer, in theory, is doing, you know, quantitative buying. It's slightly letting some passive aggressive, excuse me my pun drift off, but it's not there to actively step in and bail out France. But you look at the yields versus Italy, they've nudged ever so slightly above. But this is, this is micro, real, real small stuff at the moment. It's just that why buy France? That's your answer. You don't get any new money in even doubt you're going to, you know, if a bond matures or you've got a better option, you're going to slide out of France. And that's why it's a slow, gradual death.

[Interviewer]

Lionel I mean, on that question of why by France, the conversation that we've had with Jean d' Albar from Bloomberg Economics and plenty of others over the past couple of days has been this isn't a fiscal crisis yet, this is a political crisis. And realistically, nothing's really changed in the past. Probably since Francois Beirut, perhaps since Michel Barnier, nothing's really changed either. They'll figure it out in the end. What changes in that dynamic? Where do we get to the end of the road of, of sort of the Gallic shrug?

[Lionel Laurent]

Well, I think, as Marcus was hinting, you know, I've called France le big short, right? It is living short on a, on a relative basis because the political crisis is unfolding very slowly and everyone can see what's happening and you can, and you can model it out longer term. I think this is a political risk story in that an election changes a lot. And Marine Le Pen and her number two, Charlene Bardela, are the politicians to beat. Now, the two big questions that the two planks of Macron's legacy so far have been stable tax policy and an economic policy in France that is predictable. And pension reform and the general reform agenda, those two things have been rewarded by investors over the past decade. Those two things are starting to crack because as we've discussed, all the parties around him, especially on the far left, on the far right, want to brush those away. They do not want stable taxation, they want more budget freebies and they want to roll back pension reform. Those are the things that I think really could derail the French story even further because then you get back into the old France, the pre Macron France, but with a lot more debt and a lot worse budget deficit, which I think spooks European partners a bit more.

[Interviewer]

Just on the politics. Two of Macron's Closest allies have sort of started to disown him. Essentially, Edouard Philippe, who, okay, had gone and set up his own shop, but was still a friend to Emmanuel Macron and Gabrielle et al, the head of Macro, Macron's own party, saying on television last night, he doesn't understand the President's decisions anymore. Is everyone now just positioning themselves for the next set of elections and trying to distance himself from Macron?

[Lionel Laurent]

Totally, totally. And that's completely logical. Macron himself betrayed his predecessor, Francois Hollande, his father figure. This is the rule of French politics. I think what's slightly new, I guess, is that Edouard Philippe, in calling for a new presidential election, is really willing to get out there and say, let's make history again. It's a kind of daunting proposition. I think he's now concerned that Marine Le Pen is the politician to be even in a presidential election. Edouard Philippe had been groomed as the kind of potential heir of Macron. I think polls are quite alarming in the sense that they're showing, whether it's Le Pen or her number two, Bardela, they're really comfortably in the lead for a presidential election election. So you can see there's a lot more panic, there's a lot more fibrillity. People are willing to push the boat, boat out a little more in terms of radical proposals. And I think a Macron resignation would be a huge bombshell and I think definitely push the spread to levels that Marcus was flagging.

[Interviewer (Marcus)]

Marcus, what does the market think of the far right in France?

[Marcus Ashworth]

Well, I think in essence, it's. It's one of these misnomers is that the media portrays these, you know, Le Pen and her crew as far right, but in practice, they're very far left in socialistic terms, as an economic point of view, leaving some of the politics out of it. This would be maybe not quite as sort of Jean Luc Mellishon, you know, crypto communist, but it's pretty close to it. And that would be, you know, as Lionel has very carefully pointed out, on the various different flagships of the Macron era, would be thrown out. We would be talking, you know, it would be very, I'm sure, friendly towards a wealth tax and indeed, of course, running back that pension reform, which has been so, so expensive to get it through and so, you know, important, pivotal, I think, for how the markets view French debt. So this really is. This tactic of Macron, again, is with the snap election last year and again threatening elections, it's to try and scare the national assembly into doing what he wants let's hope that something comes out this which is sensible and a government can be formed. I mean if nothing happens, if things stands water actually the budget deficit will improve. But the question really is, is whether it's 2027 and the presidential election or before that, if we do get either a hard left or indeed the Le Pen socialism version, that France is going to be in a very different painful world. Mostly the market expects this not to happen. And at the moment that's why we're only inching slightly higher.

[Interviewer]

Can we put to bed comparisons to the Liz Truss era when we think about the situation looking at France today? Lionel?

[Lionel Laurent]

Well, I think Liz Truss and Brexit are kind of useful barometers of what happens when a country sort of tests its reputation and long held perceptions from, from the market. Basically, I think as Marx has said, the ECB is there, the Euro is that okay, France is too big to fail. So I think that there will be a question of okay if there's a staring match between Frankfurt and Berlin and Paris, who's, who's going to move first. But I think trust is frankly a useful reminder not to take things too far. And I am concerned that if the politics gets more radical and Le Pen becomes a little less mainstream and her number two decides to go a bit more radical as well on issues like pensions and taxation, you could get a much worse economic situation over the next few years and you could end up with something approaching a trust moment, even if it's not exactly the same. So I don't think you could put it entirely to bed.

[Interviewer (Marcus)]

Marcus is the other ingredient for this to turn into a trust situation that there needs to be a structural idiosyncrasy in the French bond market like we had with LDI in the uk?

[Marcus Ashworth]

Good question. No, I mean there is something going on at the moment in Holland and their pension system, but not so much in France. Where the breakdown comes is it used to be called Bund plus, whereby particularly Japanese investors would happily buy French debt which is larger than even Italian in scale, believing they were getting the equivalent of Bundt Security of German sorts of type stuff, but with an extra spread that trade, as I said, no longer happens. That's where you get the sort of no longer interested in France. You avoid France, it's not so much you actively sell, you just don't put any more money and when stuff matures you don't reinvest it. And that is I think where we have a situation. If we do get France downgraded by a second or third rating agency. We've obviously seen Fitch, but of course, the next two or three months leading up into the end of the year, when also they have this excessive deficit procedure, they have to get through Brussels, that you might see that some of the index bond funds have to start selling because France is no longer sufficiently rated double A and slips down. So that's one potential thing. But that again, will be very much a slow burn. I think we'll see that coming from quite a long way away.

[Interviewer]

Lionel, can you just give us a sense to wrap up this conversation of where the French public are in all of this as well? I do get the impression from the limited conversations I have that everyone's just a bit sick of us. Is that a fair assessment?

[Lionel Laurent]

Yeah. Sick, tired, disgusted, fed up, whatever you want, whatever adjective you want. The thing is that there's two potential outcomes, right? Either France becomes a country almost like the Netherlands, or other countries where the politics is crazy, but somehow people carry on, businesses carry on, the economy carries on. We've seen a bit of that. Or my concern is that we get much, much worse to come. There seems to be a nihilistic, almost nihilistic view in society. Huge distrust of politicians, loss of faith in policy discussed almost with the political class. And that, I think is very dangerous for the future.

[Interviewer]

And just in the short term, what do you think is going to happen this week?

[Lionel Laurent]

I think Macron is going to keep doing these kind of Hail Mary moves, but as I said, I do think parliamentary elections are the most likely outcome, if not the end of this year and the start of next year.

[Interviewer]

Okay, Lionel Laurent here with me in Paris and Bloomberg Opinion, Marcus Ashworth joining us as well. Thank you to you both for talking us through the various aspects of this unfolding, unfolding crisis. You can read the latest from both Marcus and [e-mail] opinion.

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