French lawmakers race to pass emergency rollover budget law

PARIS, Dec 23 (Reuters) - French lawmakers scrambled on Tuesday to pass emergency legislation to keep the state running in January until a proper 2026 budget can be approved by the country's deeply divided parliament.

Prime Minister Sebastien Lecornu rushed to submit the legislation late on Monday after lawmakers from both houses failed last Friday to hammer out a compromise 2026 budget text over divisions about spending cuts and tax hikes.

The law, which is likely to be passed on Tuesday, allows the state to roll over 2025 spending limits into the new year and to collect taxes and issue debt.

Finance Minister Roland Lescure warned that, though the emergency legislation would avert a U.S.-style government shutdown, it was only a stopgap and urged lawmakers to pass a proper budget as quickly as possible early in the next year.

"We're going to keep paying civil servants, essential services will continue, the schools will open after the holidays, (but) there will be no investments," Lescure said on BFM TV.

Investors and ratings agencies are scrutinising France's finances as Lecornu struggles to rein in a budget deficit running at 5.4% of national output this year - the euro zone's highest.

Lecornu's minority government has little room for manoeuvre in France's fractious parliament, where budget battles have already toppled three governments since President Emmanuel Macron lost his majority in a 2024 snap election.

France used emergency rollover legislation last year until a proper 2025 budget could be passed in February, which the government says cost 12 billion euros ($14 billion).

($1 = 0.8488 euros)

(Reporting by Leigh ThomasEditing by Gareth Jones)