French Government Faces Political Challenges in Passing 2026 Budget Amid Social Spending Plans

The French government is facing significant political hurdles in passing the 2026 budget, with debates intensifying around financing new social measures and avoiding tax hikes on middle-class families and small businesses. Amélie de Montchalin, Minister of Action and Public Accounts, criticized extreme political parties for making the budget "invotable" and incoherent, signaling that the government may resort to constitutional tools like the 49.3 procedure or ordonnances to approve the budget.

The 2026 budget emphasizes support for middle and lower-income classes, youth, and housing investment. Key measures include a reform of the activity bonus that will cost nearly €2 billion annually and benefit three million low-income households by increasing the bonus by €50. The government's commitment extends to maintaining funding for the MaPrimeRénov' program at €3.5 billion to promote energy-efficient home renovations. A new status for private landlords investing in moderate-rent housing is also proposed, offering new tax exemptions to stimulate affordable housing availability.

To balance social spending with fiscal discipline, de Montchalin highlighted the government's plan to reduce the public deficit to below 5% of GDP in 2026, down from 5.4% in 2025, without introducing new taxes. Instead, fiscal efforts will be shared between spending cuts and revenue increases, with local authorities contributing between €2 billion and €2.5 billion net. De Montchalin also addressed concerns about wealthy individuals' tax contributions, confirming that no wealthy French citizen pays zero income tax, with expected measures to ensure fair taxation.

The Socialist Party (PS), led by Olivier Faure, indicated it would not vote to censure the government if new social measures are funded fairly and not at the expense of the French people. Faure stressed the importance of funding clarity and suggested that a surtax on large companies, potentially at €8 billion as desired by the PS, should finance these measures. However, other opposition parties like Les Républicains and Renaissance have opposed increasing surtax revenue beyond €6.3 billion. Faure expressed preference for a parliamentary vote over procedural methods like 49.3 but signaled openness depending on budget approvals.

Prime Minister Sébastien Lecornu will soon send a detailed letter to parliamentarians explaining the budget’s measures and funding strategies. Despite left-wing parties such as the Communists and Ecologists opposing the budget, the government seeks bipartisan support to avoid deadlock, with Montchalin emphasizing that fiscal stability and social support must coexist. The next days will be crucial as the government navigates political tensions to secure budget adoption and implement its social agenda.