Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
French lawmakers have rejected a first draft of the 2026 budget in the country’s fractured parliament, hampering Prime Minister Sébastien Lecornu’s bid to find a deficit-cutting agreement.
Lecornu, France’s third new prime minister since snap legislative elections last summer, is racing to adopt a budget by an end-of-year deadline while whittling down the public deficit from 5.4 per cent to below 5 per cent next year.
The bill could determine Lecornu’s survival after his recent predecessors were toppled over budget disagreements in France’s lower house, which was divided into three main blocs with no majority in the 2024 election.
In the early hours of Saturday, lawmakers voted on a partial first text focused on tax-raising measures. After myriad amendments, the bill was rejected by 404 lawmakers in the 577-strong parliament, with only one in favour and 84 abstentions. while dozens more were absent from the 2am vote.
Even members of Lecornu’s and President Emmanuel Macron’s own centrist camp rejected the bill.
The bill was amended by parties from the far left to the far right to include a raft of extra taxes, including on multinational businesses that could run counter to the constitution. There were also proposed levies on wealthy individuals and France’s largest companies. The government had deemed the package excessive and said the budget had fallen prey to “fiscal witchcraft”.
“Parties on the extremes have chosen, with a cynical attitude, to put forward inapplicable measures,” Amélie de Montchalin, the budget minister, said after the vote. However she said she remained “convinced the majority of groups in the National Assembly can converge enough to give our country a budget”.
In the weeks ahead there are several more procedures in parliament, including a review of the bill by the right-leaning senate.
If the final budget draft is not adopted by the lower house, Lecornu’s government could opt to pass its original version by decree, although he has signalled he would try to avoid forcing the package through.
France can also avoid a US-style shutdown by rolling over the 2025 budget if it cannot agree a budget by the end of the year. But that risks weighing on the deficit at a time when rating agencies and investors were scrutinising the country’s debt levels and ability to carry out reforms.
The centre-left Socialists are crucial to Lecornu’s chances of passing the budget, as they hold a swing vote in the lower house. Far-right and far-left parties are set against the budget and maintain that French voters must return to the ballot box.
Lecornu has sought to win Socialist support by postponing an unpopular pensions reform from 2023, in a blow to Macron’s agenda. Socialist lawmakers also rejected the draft budget overnight, however, saying the revenues raised from taxes were insufficient.
Read the full article here
