French Government Moves to Pass Special Law to Overcome 2026 Budget Deadlock

France is facing a critical moment as Prime Minister Sébastien Lecornu engages in final consultations with political parties to resolve an impasse over the 2026 state budget. After a failure to reach consensus in a mixed parliamentary commission last Friday, the government is preparing to present a "special law" designed to temporarily finance the state and its administrations. This law would allow the government to continue raising taxes and allocate funds according to the 2025 budget until a full 2026 budget is adopted.

Consultations on December 22 brought Lecornu together with leaders from a range of political factions including Renaissance, Horizons, MoDem, Liot, the Socialists, the Republicans, the Communist Party, and the Ecologists. The goal is to secure a compromise that could lead to the passage of this urgent law, with a vote expected by Tuesday in the National Assembly and the Senate.

Public Accounts Minister Amélie de Montchalin emphasized the urgency, stating the government aims to adopt a comprehensive 2026 finance law by the end of January. She highlighted the necessity of compromise among parties and mentioned that the upcoming budget will include targeted tax increases and carefully measured cuts, responding to demands from parties such as the Socialists.

Despite efforts to avoid it, there is rising pressure on Lecornu to invoke Article 49.3 of the Constitution, which allows the government to pass legislation without a parliamentary vote. The Prime Minister has pledged not to use this at the Socialists' request, but some politicians, including budget rapporteur Philippe Juvin, suggest they would support it if it resulted in a responsible budget.

A Council of Ministers meeting is scheduled to present the special law following the consultations. The Finance Committees of both chambers will hear from Economy Minister Roland Lescure and Montchalin before the anticipated vote. The special law is widely regarded as a temporary measure, with negotiations on a full 2026 budget expected to resume in early January.

This situation underscores the challenges faced by the French government in balancing fiscal responsibilities with political divisions, as it seeks to ensure continuous state funding and economic stability into 2026.