French Parliament Clears Path for Social Security Budget Amid Political Turmoil

French lawmakers have approved taxes to fund welfare, health, and pension spending in the 2026 social security budget. Prime Minister Sebastien Lecornu negotiated concessions to secure support, averting a potential financial crisis. The overall public sector budget deficit is targeted at 5% of GDP next year.

French lawmakers in the lower house of parliament approved new taxes aimed at financing welfare, health, and pension expenses in the 2026 social security budget. The measure, a critical component of France's state budget, was passed with 166 votes in favor and 140 against.

Prime Minister Sebastien Lecornu made strategic concessions to maintain legislative momentum, particularly in light of hesitancy from centrist Horizons and socialist factions. To ensure passage, Lecornu agreed to a smaller-than-planned increase in a social security tax and abandoned proposed hikes in state health insurance deductibles, pleasing Socialist lawmakers.

The move seeks to stabilize France's public sector budget deficit, targeted at 5% of GDP for the next year. Political instability since President Emmanuel Macron lost his parliamentary majority raises stakes, with recent history of a budgetary crisis leading to a no-confidence vote that toppled the then-cabinet.

(With inputs from agencies.)