France on Brink of 2026 Budget Deal Amid Intense Negotiations

France nears a 2026 budget deal as the government makes concessions to secure support from the Socialists, crucial for overcoming no-confidence votes. Key measures include maintaining tax rebates on pensions and increasing low-income supplements. Corporate taxes will fund these initiatives, but the budget strain could affect economic growth.

The French government is edging closer to securing a 2026 budget deal after presenting new proposals accommodating various political factions, according to Socialist lawmaker Boris Vallaud speaking with Le Parisien.

Facing a lack of parliamentary majority, President Macron's administration has continually negotiated over months, aiming for Socialist support while avoiding alienating conservatives. Prime Minister Sebastien Lecornu announced Friday the preservation of pension tax rebates and €50 monthly income supplements to aid 3 million low-income households. Extended student meal subsidies and affordable housing initiatives also feature in the proposal, funded by prolonging a corporate surtax into 2026 raising €8 billion.

Despite the Prime Minister's compromise, Vallaud insists on further assurances about reintroducing a property wealth tax to address deficit concerns. With cabinet discussions imminent, the government's survival might hinge on bypassing parliament using executive measures, albeit at higher economic costs in the future.

(With inputs from agencies.)