"France has finally approved its 2026 budget, closing a chapter of political paralysis that has lingered for almost two years and weighed heavily on confidence at home and abroad. After two failed prime ministers, repeated market tremors, and months of institutional drifting, the passage of the spending plan has brought a degree of calm back to French politics and financial markets alike."
"The route to this budget has been costly, both economically and reputationally. Since President Emmanuel Macron's snap election in 2024 produced a hung parliament, fiscal policymaking has been dominated by negotiation and survival at precisely the moment when public finances demanded clarity and direction. Instead of decisive consolidation, France experienced delay. Instead of structural reform, it absorbed prolonged uncertainty, allowing pressures to compound quietly in the background."
France approved its 2026 budget, ending nearly two years of political paralysis that undermined domestic and international confidence. The spending plan's passage calmed financial markets and narrowed France's debt risk premium over Germany to levels seen in June 2024, but markets rewarded the end of dysfunction rather than demonstrable fiscal strength. Political compromises replaced earlier fiscal targets and reform plans: a prior deficit goal of 4.6% was abandoned, pension reforms were scrapped, and deficit is projected at about 5% of GDP in 2026, only a small improvement from 5.4% in 2025. Two prime ministers fell amid the impasse and markets reacted sharply.
Read at London Business News | Londonlovesbusiness.com
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