France to miss 2026 budget deadline as lawmakers fail to reach deal

French lawmakers failed to reach a compromise on the 2026 state budget on Friday, leaving France without a new budget approved before the end of the year.

The joint committee of seven senators and seven deputies broke down in less than an hour, with disagreements so pronounced that discussions never properly began.

Philippe Juvin, the Senate budget rapporteur, acknowledged "the absence of agreement on a common version" that could be adopted by both chambers within the required timeframe.

Prime Minister Sébastien Lecornu said he regretted that parliament would be unable to vote on a budget before 31 December.

His cabinet noted "the failure of the joint committee in which deputies and senators sat, without the government," and "regrets the lack of will on the part of parliamentarians," Lecornu said in a post on X.

He announced he would meet political leaders from Monday to discuss how to protect French citizens and find conditions for a solution.

The government is now expected to seek a special law that would temporarily roll over the 2025 budget into the new year while debates continue.

Such legislation would allow the state to continue collecting taxes and paying civil servants after 1 January.

Central bank warning

François Villeroy de Galhau, governor of the Banque de France, warned on France Inter that a special law would be only a short-term solution and would lead to a deficit "far higher than desired."

The special law would not include any savings measures and would prevent necessary spending increases, such as for defence, he said. Villeroy added that France would put itself in danger if its deficit exceeded 5% of GDP.

France's deficit is currently running at 5.4% of output this year, the eurozone's highest. The minority government had insisted the 2026 budget must keep the fiscal deficit below 5%, having already abandoned its original 4.7% target through costly concessions to Socialist lawmakers.

The Senate's budget proposal, the only version voted on, reached 5.3% with spending €9bn above the target. Differences between the government camp, which favours lower spending and taxes, and the Socialists, who want higher budgets, proved insurmountable.

Parliamentary deadlock

Lecornu was appointed prime minister in September and reappointed in October after his two predecessors were both toppled by parliament over cost-cutting measures.

He had pledged to pass a budget by year-end without using constitutional powers to force it through without a vote, as done in previous years.

Eric Coquerel, president of the joint committee and a member of the far-left France Unbowed party, said "there is no reason to begin examining the articles" since the rapporteurs could not present a compromise text.

The budget impasse comes days after final adoption of the Social Security budget, which also proved contentious. Investors and ratings agencies are closely monitoring France's fiscal position amid soaring debt.

A special law was last used to temporarily extend France's 2025 budget into early this year, with a full spending plan approved in February after then-prime minister François Bayrou forced it through the lower house.

Political crisis continues

France has been in a political crisis since President Emmanuel Macron called snap elections in 2024, which were intended to consolidate his power but instead resulted in a hung parliament and gains for the far right.

The parliamentary shuttle is expected to resume with the Senate's version of the budget, the last text voted on.

However, all political players acknowledge that a special law would be inadequate, as it would prevent necessary adjustments, such as increased defence spending amid volatile international conditions.

France's debt stood at 117.4% of GDP in the third quarter of 2025, up from previous quarters. Villeroy has warned that France's bond yields have moved dangerously away from Germany's and toward Italy's, significantly increasing borrowing costs.