While public attention in France is largely consumed by ongoing student protests, and with angry motorists and farmers preparing to take to the streets this coming Saturday, Prime Minister Sébastien Lecornu faces a much more immediate and existential threat to the nation: the 2027 state budget. This legislative process represents the most significant challenge for the country, as the government is currently deprived of the standard remedy used by unpopular French administrations to quell social unrest—the ability to simply spend more money to resolve problems.
All French governments have historically been unpopular, and most have attempted to hose down social problems with increased spending. However, few have ever addressed the structural flaws inherent in French state financing, and notably, no government has managed to balance a budget since 1974. The global financial markets have now reached a breaking point, losing patience with broken fiscal promises. The cost of servicing France’s accumulated €3.6 trillion debt has soared over the last two months, although it has seen a slight decline in recent days. Interest payments alone are projected to cost France at least €90 billion next year, a figure that slightly exceeds the entire national education budget. While some global market participants are deeply concerned, others view a potential French financial crisis as a lucrative opportunity to generate significant profit.
A new budget marathon commenced in the splintered National Assembly on Tuesday night. This same parliamentary process has successfully brought down two previous prime ministers in the last two years: Michel Barnier and François Bayrou. Both men warned that France was rolling toward a financial precipice, only to be mocked and rejected by a combined opposition of the Far Right, moderate, and extreme Left. That precipice has now arrived, yet the National Assembly shows little sign of taking the situation seriously, largely because a presidential election is looming on the horizon.
During the past week, the finance committee debated the government’s modest deficit-cutting budget for 2027, which aimed to reduce the annual shortfall from 5.4 percent of GDP to 5 percent. Instead of supporting this, the committee added new spending, rejected proposed savings, and increased the deficit by €8 billion before ultimately throwing out the budget draft entirely. While these decisions are not legally binding, they illustrate the unhelpful and unrealistic mood of an assembly where the government controls only 211 out of 577 seats.
Prime Minister Lecornu was himself briefly forced from office a year ago. He returned only after agreeing to a budget that abandoned the most significant reform of recent years. To secure Socialist support, he froze the necessary but unpopular increase in the state pension age from 62 to 64, a move that leaves France behind other EU countries that are moving toward 67. He has no realistic hope of gaining Socialist support this year, as the main centre-left party is attempting to win back voters from Jean-Luc Mélenchon’s hard-Left La France Insoumise, where any compromise with the government is viewed as a sign of weakness.
International markets are watching this process with a mixture of puzzled fascination, attempting to decipher the arcane rules of French budget-making, such as Article 49.3 of the Constitution and the complexities of having two separate budgets. If the government or the budget falls, borrowing costs are expected to explode. A full-scale “Greek” fiscal crisis may or may not be avoided with EU assistance, but the time when France loses its independent ability to resolve its own financial mess is drawing closer. A first key vote is expected as early as Tuesday, October 20th, regarding the revenue side of the government budget.
All eyes are currently on Marine Le Pen. The 139 deputies she controls hold the fate of the government—and potentially the country—in their hands. Despite various scandals, the Far Right leader remains the runaway front-runner for the presidential election scheduled for April 18th and May 2nd. On Tuesday, she faces her first major decision as a likely national leader rather than a populist rabble-rouser. Le Pen has publicly acknowledged that she would inherit a government and market crisis if no formal 2027 budget is in place by the time she enters the Elysée next May. Consequently, she may act constructively in her own interests, though the government remains deeply skeptical of her word, recalling how she joined a left-wing censure vote against Michel Barnier two years ago at the last moment.
Le Pen’s attempt to transition into a stateswoman was tested last week when she unveiled proposals to cut €180 billion from state spending over five years and reduce the deficit to 3 percent of GDP by 2030. The plan was almost universally dismissed as a product of magical thinking, relying on inflated numbers and dubious assumptions. Her promise to reduce the deficit while simultaneously cutting taxes and lowering the pension age to 62 or 60 was rejected by markets as absurd, leading many to conclude the plan was merely a collection of misleading campaign soundbites.
As the Assembly reaches its first moment of truth next week, Le Pen could instruct her deputies to abstain, allowing the revenue budget to pass its first reading. However, Lecornu appears to view this as too risky. Alternatively, the Prime Minister could invoke Article 49.3 to impose the budget by decree, provided he survives a subsequent vote of censure. Le Pen would then have to decide whether to join the Left in a censure motion, topple the government, and trigger a debt crisis. On Tuesday night, her deputies helped the government reject a Socialist move to dismiss the budget without a reading, which may offer a clue to her strategy. If the Assembly deadlocks, Lecornu has a constitutional right—never before used—to impose his original tax and spending plans by decree if no decision is reached within 70 days, or by December 18th. While this might suit everyone, it could also lead to the Assembly taking revenge by unseating the Prime Minister, even if the budget remains in force. Ultimately, Le Pen appears to be hurtling toward the reality of governance, though she continues to cling to the ideological simplicities of a populist.
