France is moving closer to a deal on its 2026 budget after the government presented what it described as a “last-ditch” proposal that includes concessions to opposition parties, senior Socialist lawmaker Boris Vallaud said in an interview with Le Parisien.
Budget negotiations have dragged on for months because President Emmanuel Macron’s government lacks a parliamentary majority, forcing France to operate under a rollover budget. Prime Minister Sebastien Lecornu has sought to secure Socialist backing without alienating conservatives by proposing an increase in the monthly income supplement for low-income workers. The benefit would rise by around 50 euros (US$58) for roughly three million households. He also said the government would no longer proceed with cuts to a tax rebate on pensions.
The proposal also includes extending subsidised meals for university students and increasing support for affordable housing. These measures would be financed by 8 billion euros (US$9.3 billion) raised through a corporate surtax on large companies in 2026.
“The Prime Minister’s announcements allow us to imagine that we will not need to vote no-confidence,” Vallaud told Le Parisien. However, he said the government must still provide “assurances” on the reintroduction of a property wealth tax and a levy on holding companies to address France’s deficit levels.
Lecornu said the budget deficit would be capped at no more than 5% of gross domestic product. Government spokeswoman Maud Bregeon said cabinet ministers would meet on Monday to discuss options for pushing the budget through without a parliamentary vote.
“The good news is that the prospect of early legislative elections is receding, and the government should remain in place for the moment,” analysts at ING said. “However, the final budget is far from business-friendly, and the tax increases are likely to weigh on investment and hiring in 2026, with a negative impact on economic growth.”
(With Inputs from Reuters)
