The French parliament failed to agree on the 2026 national budget on the 19th of December, meaning that emergency solutions will have to be sought to avoid a standstill in the country at the beginning of the year, writes Reuters.
A joint commission of deputies from both chambers admitted defeat after less than an hour of discussion on the budget draft. French Prime Minister Sebastien Lecornu said that he would discuss further action with key political leaders on the 22nd of December, adding that parliament would not have time to vote on the new budget before the new year.
The budget talks’ breakdown likely means that Lecornu will have to create emergency regulations to allow spending, tax collection and borrowing at the beginning of the new year until the budget is adopted. However, such a regulation would only be a temporary solution. Before the budget talks ended, the head of the French central bank, Francois Villeroy de Galhau, said that the emergency legislation does not provide any choice but that
more resources should be allocated, for example, to defense.
De Galhau added that the special law could lead to a budget deficit that is significantly higher than desirable because it does not include cost-saving measures and does not include taxes.
As Lecornu tries to rein in the budget deficit, which is currently the highest in the eurozone, investors and rating agencies have been paying close attention to France’s finances. The minority government insists that next year’s budget deficit should be below 5%. The French Senate approved the budget with a 5.3% deficit on the 15th of December.
Lecornu’s government has little room for maneuver in a divided parliament, where budget disagreements have already led to the collapse of three governments since the summer of 2024.
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