France Faces Rising Deficit and Political Debate Over Social Security Budget for 2026

The French National Assembly recently adopted the revenue section of the Social Security budget, with the overall budget vote expected to occur on Tuesday amid political uncertainty. The government projects the Social Security deficit for 2026 to reach €22.5 billion, exceeding its initial target of €20 billion, prompting concern among officials and calls for reforms.

Prime Minister Sébastien Lecornu acknowledged the budget's imperfections but described it as "the best possible" under current circumstances, urging deputies to vote in the public interest and avoid political maneuvering. A focal point ahead of the upcoming vote is the health insurance spending target, known as Ondam, proposed to increase by 3% — up from last year's 2%. Health Minister Stéphanie Rist emphasized this rise to better fund healthcare needs.

Contentious issues remain, including pension reforms and social minima. Deputies rejected a proposal to freeze pensions and social minima, aligning with previous Assembly decisions, despite the Senate partially restoring this measure. The Assembly also reinstated the suspension of pension reform with a vote of 162 to 75, opposing the Senate's stance.

Beyond immediate budget concerns, the sustainability of France's social policies is under scrutiny. Social spending accounts for 32.3% of GDP, well above the EU average of 26.5%, raising competitiveness questions. Analysts warn that if present social generosity continues unchecked, retirement system deficits may climb from €7 billion in 2025 to as high as €35 billion by 2045. This scenario underscores the urgent need for governments to reduce social spending and implement reforms to prevent worsening deficits.

Frédéric Valletoux, president of the Social Affairs Commission, expressed deep concern over the expanding deficit. Prime Minister Lecornu hinted at potential reforms via decrees after consultations, underscoring that the current deficit level is unsustainable and demands action.

As the Social Security budget debate continues, key votes on spending allocations and pension policies will determine France's approach to balancing social protection with fiscal responsibility in the coming years.