France passes delayed 2026 budget, ending months-long saga

By Michel Rose

PARIS, Feb 2 (Reuters) – France finally got a 2026 budget on Monday, when two no-confidence motions failed, allowing the legislation to pass and heralding a period of relative stability for Prime Minister Sebastien Lecornu’s weak minority government.

Budget negotiations have consumed the French political class for nearly two years, after President Emmanuel Macron’s 2024 snap election delivered a hung parliament just as a massive hole in public finances made belt-tightening more urgent.

The budget talks have cost two prime ministers their jobs, unsettled debt markets and alarmed France’s European partners.

However, Lecornu – whose chaotic two-stage nomination in October drew derision around the world – managed to secure the support of Socialist lawmakers through costly but targeted concessions, boosting his stature in the process.

“France finally has a budget. A budget that embraces clear choices and essential priorities. A budget that reins in public spending, which does not raise taxes for households and businesses,” Lecornu said in a post on X after the no-confidence votes, adding he was submitting the budget to the Constitutional Court to ensure it was compliant with the constitution.

Despite the still-elevated budget deficit of 5% of GDP seen by Lecornu, investors have taken heart in the new stability. The French government debt risk premium over the German benchmark has returned to levels last seen in June 2024, before Macron’s snap-election announcement. 

Two votes of no-confidence triggered by the hard-left and far right fell short of getting a majority after the Socialists said they would not back them, which means the 2026 budget – already more than a month overdue – is now adopted. 

The Socialists’ main scalp was the suspension of an unpopular pension reform, delaying the planned increase in the retirement age to 64 until after next year’s presidential election.

REFORMS ON PAUSE UNTIL PRESIDENTIAL ELECTION

With just over a year to go before the next presidential election in the spring of 2027, the respite on the budget front is giving Macron some breathing space, as he nears the end of his second term with historically low approval ratings.

Having lost control of the domestic agenda, his push for supply-side economic reforms has largely stalled. Meaningful spending cuts are unlikely before he leaves office, with lawmakers showing little appetite for unpopular measures as election campaigning intensifies.

Macron’s supporters say Lecornu, by showing flexibility and an ability to compromise, has prevented the return of wealth taxes and preserved Macron’s legacy of making France more attractive to foreign investors. 

The president is now focusing almost entirely on foreign policy, pushing Europe to be less dependent on foreign powers, and advocating a harder line in confronting U.S. President Donald Trump over tariffs or the Greenland crisis. 

At home, however, he leaves his centrist bloc without a clear successor and significantly weakened against a resurgent far right. 

Two of Macron’s former prime ministers are gearing up for the presidential race, Edouard Philippe and Gabriel Attal, while Lecornu has also gained popularity over the past few months. 

But should the centre remain fragmented, and with no primary planned, it remains uncertain whether a mainstream candidate will reach the election’s second round to face the far right, whether led by Jordan Bardella or Marine Le Pen.

(Reporting by Michel RoseEditing by Ros Russell and Benoit Van Overstraeten)