France's Budget Race Against Time: Avoiding a Shutdown

France is racing against time to pass its 2026 budget, with special legislation as a backup to prevent a government shutdown. The current talks are stalled in the Senate, with a looming December 23 deadline for final approval. The budget deficit forecast is near 5% of GDP.

France finds itself in a race against the clock to approve its 2026 budget before year-end, as stated by Finance Minister Roland Lescure. The Senate is debating the budget bill following the lower house's rejection of certain tax measures. A joint committee of both houses is set to finalize the budget for approval by December 23.

Prime Minister Sebastien Lecornu's administration faces limited leeway in France's divided parliament, a situation that previously saw three governments fall amid fiscal disputes after President Emmanuel Macron lost his majority in the 2024 snap election. However, Lescure remains optimistic about passing the budget in time.

Without a timely agreement, France could resort to special stopgap legislation ensuring continued government operations and tax collections, thus averting a U.S.-style shutdown. The Senate is inclined to back a version with fewer tax hikes while offsetting increased social security budget needs with spending cuts. The expected budget deficit is approximately 5% of GDP for next year.

(With inputs from agencies.)