Significant Changes to French Budget and Financial Aid Effective October 1, 2025
France introduces essential budget changes while grappling with a political crisis affecting future budgets.
- • Decrease in reference gas price
- • Reduction of VAT on photovoltaic panels
- • Revaluation of housing assistance programs
- • Concerns over 2026 budget adoption due to political crisis
Key details
On October 1, 2025, several major changes aimed at aiding French consumers and reforming financial measures came into effect. Among these changes, the reference price of gas will decrease, offering relief from rising energy costs for households. Additionally, the value-added tax (TVA) on photovoltaic panels has been reduced, incentivizing the move towards renewable energy sources. Furthermore, housing assistance programs, including APL (Aide Personnalisée au Logement), have been revalued, underscoring the government's commitment to supporting families and individuals in securing affordable housing options.
Despite these positive developments, the French government faces a pressing political crisis that raises concerns about the approval of the budget for 2026, which must be in place by January 1, 2026, to avoid financial disarray. Currently, France's public deficit hovers around 5.8%, significantly higher than Spain's projected 2.7%, despite Spain operating without a new budget since 2022. Spain's fiscal stability demonstrates that it is possible to manage social benefits without new budgetary approvals, a contrast to France where the government struggles with the adoption process due to a strict constitutional framework.
While Spain has enacted progressive reforms, leading to increases in the minimum wage and new taxation measures that bolster revenue, France has seen stagnation in tax bracket adjustments, negatively impacting households amidst high inflation and economic pressures. The French Finance Minister is under pressure to present a viable budget amidst coalition complexities, highlighting the tensions between immediate financial aid needs for citizens and the unfolding political landscape.
In summary, as France implements new financial support measures to alleviate the cost of living for citizens, the looming uncertainties of the 2026 budget adoption compound the challenges facing the current government during a time of economic struggle and political instability.