French Prime Minister Secures Budget Amid Political Fractures and Concessions

In a significant move for the French government, Prime Minister Sébastien Lecornu has achieved a crucial milestone with the approval of the 2026 budget by parliament, albeit through a series of compromises and concessions. On a tense Tuesday evening in the National Assembly, the vote concluded with 247 deputies in favor of the social budget, 234 opposing it, and 93 abstentions, marking an incredibly close outcome that reflected the uncertainties surrounding France's current political landscape. The political climate in France has turned increasingly fragmented since the early parliamentary elections of summer 2024, where no single block has been able to establish a stable majority. France now faces the highest state deficit among major EU countries, compelling Lecornu, who governs with ministers from both the center and the right-leaning Republicans, to seek external support. He found that needed assistance primarily from the opposition Socialists, who managed to secure several significant concessions over the previous months. A key outcome of these negotiations has been the decision to suspend President Emmanuel Macron's unpopular pension reform that was introduced in 2023. The retirement age remains temporarily at 62 years and 9 months, with pension funds no longer being frozen as initially planned. This move comes as a relief to many who were concerned about the implications of an increased retirement age amid rising inflation. In their negotiation efforts, the Socialists successfully prevented a proposed doubling of copayments for medications, a cost-cutting measure that would have heavily impacted the health care sector. The Greens, who previously opposed Lecornu’s administration, played a pivotal role in pushing for increased funding in health care, particularly for hospitals. The newly approved social budget, however, is anticipated to run a deficit of 225 billion euros—considerably higher than the initial target of 17 billion euros. Lecornu, warning of the impending consequences, expressed that failing to implement a proper budget could lead to a carryover of last year's budget, potentially leading to a shortfall exceeding 30 billion euros. The risks are particularly significant for France, as it struggles with the highest government debt in the EU. During nearly three months of debates, it has been the political extremes that resisted compromise. The radical left, La France insoumise, led by Jean-Luc Mélenchon, has called for Macron to take responsibility for the ongoing political turmoil, while far-right leader Marine Le Pen has advocated for the dissolution of parliament. Both parties perceive an opportunity in the chaos, banking on a potential boost in future electoral results. Contrarily, polls indicate that a majority of French citizens are eager for the establishment of a budget and an end to the ongoing uncertainty. Consequently, Lecornu has celebrated this small triumph as a step towards stability, yet challenges loom ahead. By December 23, the complete budget—including allocations for governmental operations—must be finalized. It remains uncertain whether the Socialists will continue to lend their support, especially as they are likely to insist on introducing a tax on the super-rich, known as the Taxe Zucman. Proposed by economist Gabriel Zucman, this measure seeks a 2% tax on French citizens with wealth exceeding 100 million euros, impacting approximately 1,800 individuals. However, opposition from economically liberal forces in Lecornu's cabinet remains a significant hurdle, as they argue that implementing such a tax could drive wealthy citizens to leave France. Ultimately, Lecornu is left with challenging choices, demanding patience and tolerance from his coalition. Many members of his ruling coalition find themselves struggling to align with what is perceived as a significantly left-leaning budget. Despite this discontent, the fear of triggering new elections appears to outweigh the aversion to compromise. As France balances its precarious political reality with pressing economic needs, the coming weeks will be crucial in determining the country's fiscal future. Related Sources: • Source 1 • Source 2