French National Assembly Engulfed in Heated Debates Over 2026 Budget Strategy

The French National Assembly has entered an intense phase of debates as it examines the 2026 budget, particularly focusing on the social security budget (PLFSS) and the wider economic implications. The government has proposed a budget effort totaling 40 billion euros for 2026, aiming to manage expenditures by disassociating certain costs from inflation, which could save up to 28 billion euros. However, the examination faces challenges, with Philippe Juvin, rapporteur for the budget, expressing doubt about completing the review fully and suggesting that votes might only occur on revenue but not expenditures (128735).

A major point of contention is the government's plan to double medical deductibles and flat-rate contributions to the social security system. Health Minister Stéphanie Rist described this approach as a 'responsibility flat-rate' intended for cost savings. Yet, critics including patient advocates and healthcare providers warn these measures will disproportionately harm vulnerable populations. The Court of Auditors forecasts a social security deficit of 23 billion euros by 2025, underscoring financial pressures (128845).

Economic concerns extend beyond healthcare. Former Minister of Economy Bruno Le Maire has warned that current budget discussions overlook industrial matters, risking a second wave of deindustrialization. After some progress between 2017 and 2024, where 650 new factories were opened and over 150,000 industrial jobs created, current debates are viewed as threatening fiscal stability and economic resurgence. Notably, the CGT union general secretary has highlighted this as a moment of massive deindustrialization (128736).

Politically, the budget debate is fragile. Socialist deputy Jérôme Guedj emphasized the criticality of the PLFSS, warning that compromising on the bill could destabilize the government. He pointed to prior budget difficulties that led to a ministerial downfall and stressed protecting the middle and lower classes amid contentious proposed measures. Prime Minister support for unfreezing social minima has somewhat eased tensions with the Socialist Party following the rejection of the multinational tax proposal (128787, 128735).

Meanwhile, Nobel laureate economist Philippe Aghion criticized the intelligence and economic understanding of some deputies and dismissed a proposed tax on multinationals as unrealistic. He cautioned that applying such a tax only in France would create a 'fiscal prison,' prompting companies to relocate (128735). This highlights diverging views within the Assembly about balancing fiscal responsibility and economic competitiveness.

With divisions deep and key votes uncertain, the Assembly remains an "electric" environment as it wrestles with balancing social solidarity, economic growth, and fiscal discipline in the 2026 budget.