France’s parliament has approved emergency legislation to avoid a government shutdown following a failure to agree on the 2026 state budget. The “special finance law” ensures that the state can continue tax collection, funding for local authorities, and allow limited borrowing, maintaining public services into the new year. This temporary measure aims to facilitate discussions for a comprehensive budget to be passed in January, addressing long-term fiscal priorities and managing the national deficit.
The urgency for this bill arose from protracted budget negotiations that collapsed after months of discussions. The government’s proposed budget included significant spending cuts and tax increases, crucial for reducing the public deficit, which currently stands at 5.4% of GDP—the highest in the eurozone. However, these proposals faced staunch opposition from various political factions, resulting in a legislative stalemate.
Prime Minister Sébastien Lecornu has urged cross-party cooperation to finalize the budget, emphasizing the need for lawmakers to put aside differences for the greater good. The government aims to lower the deficit to 5% of GDP and restore investor confidence amid recent political unrest and the aftermath of snap elections. France’s high public spending, driven by robust welfare programs, healthcare, and education, currently exceeds taxation revenues.
The emergency bill represents the second consecutive year that France has failed to pass a budget on time, forcing reliance on such a law to sustain state functions. Although this measure averts an immediate shutdown, it comes with financial implications, including halted investments and potential tax burdens, with an estimated €6.5 billion loss in 2026 revenue if the law is in effect throughout the year. This political impasse has deepened public disillusionment, highlighting the urgency to resolve budget issues ahead of the 2027 presidential election.
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