France Adopts Budget as PM Survives No-Confidence Votes

Summary

France's parliament adopted the 2026 budget after Prime Minister Sebastien Lecornu survived multiple no-confidence votes, ending four months of political uncertainty. The budget uses smaller spending cuts and new taxes on multinationals, high incomes, and family holdings, leaving the deficit around 5% and debt projected at 118% of GDP this year. The French-German 10-year yield spread has narrowed from 85 basis points to below 60, though weak growth and limited reforms keep long-term fiscal risks elevated.

• France adopted its 2026 budget after Lecornu survived six no-confidence votes.
• The budget relies on tax increases and smaller spending cuts than earlier proposals.
• France reported its narrowest public finance gap since COVID at less than €125 billion for 2025.
• The 2026 deficit target is about 5% of GDP.
• French debt is expected at 118% of GDP this year and potentially 130% by 2030.
• Growth is expected just over 1%, with no major reforms before 2027.
• The French-German 10-year yield spread narrowed from about 85 basis points to below 60.
• March local elections are seen as a bellwether for the 2027 national elections.