Budget deadlock forces France to seek stopgap legislation

France is bracing for emergency stopgap legislation to prevent a government shutdown after lawmakers abandoned discussions on the 2026 budget, failing to reach a compromise.

Members of a joint parliamentary committee, representing both the National Assembly and the Senate, ended talks after less than an hour, unable to agree on a budget bill, Reuters reports.

Prime Minister Sébastien Lecornu said he would consult with key political leaders on December 22 to determine the next steps, adding that “there is no longer enough time for a parliamentary vote on a budget before the end of the year.” The collapse now forces Lecornu to seek emergency legislation allowing government spending, tax collection, and borrowing in the new year until a full budget can be approved.

Central Bank Governor François Villeroy de Galhau warned that such measures “offer only a short-term fix that makes no policy choices and includes no cost-saving or tax measures, potentially driving the deficit significantly higher.”

France relied on similar emergency legislation last year, which Budget Minister Amélie de Montchalin said cost 12 billion euros ($14 billion) before a full budget was passed in early February.

Investors and ratings agencies are closely monitoring France’s finances as Lecornu struggles to rein in a budget deficit projected at 5.4% of GDP this year—the highest in the eurozone. The minority government insists on keeping the fiscal deficit below 5% next year, though it has already retreated from its original 4.7% target after making costly concessions to Socialist lawmakers.

The Senate approved a 2026 budget on Monday with a deficit of 5.3%, after conservatives blocked tax increases that could have offset a larger-than-expected social security shortfall approved by the lower house. Fresh negotiations in January may prove equally challenging.

Pressure is mounting on Lecornu to invoke special constitutional powers to bypass parliament—a move he has pledged not to take. Conservative Republicans leader Bruno Retailleau urged the Prime Minister to use those powers, though such a step could trigger a no-confidence vote, potentially toppling the government.

Lecornu’s minority administration faces a narrow margin in France’s fractious parliament, where budget disputes have already led to the fall of three governments since President Emmanuel Macron lost his majority in the 2024 snap election.

By Vafa Guliyeva