Finance
French PM to suspend Macron's flagship pension reform
Published by Global Banking & Finance Review®
Posted on October 14, 2025
4 min readLast updated: January 21, 2026
Global Banking & Finance Review®
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Published by Global Banking & Finance Review®
Posted on October 14, 2025
4 min readLast updated: January 21, 2026
French PM Sebastien Lecornu suspends Macron's pension reform until post-2027 elections to stabilize political tensions, impacting France's economy.
By Elizabeth Pineau and Michel Rose
PARIS (Reuters) -French Prime Minister Sebastien Lecornu promised on Tuesday to suspend a landmark pension reform until after the 2027 election, sacrificing one of President Emmanuel Macron's legacy achievements to ensure the government's survival.
By bowing to pressure from leftist lawmakers who revile the 2023 reform, Lecornu has managed to stave off a stark escalation in France's months-long political crisis.
The Socialists welcomed his concession, saying they would not vote to topple him in no-confidence votes on Thursday, meaning Lecornu will almost certainly live to fight another day.
Lecornu's proposal to mothball the pension overhaul threatens to kill off one of Macron's main economic legacies at a time when France's public finances are in a perilous state, leaving him with little in the way of domestic achievements after eight years in office.
France has been mired in its worst political crisis in decades as a succession of minority governments have sought to push deficit-reducing budgets through a truculent legislature split into three distinct ideological blocs.
Lecornu, Macron's sixth prime minister in less than two years, announced the suspension in parliament as part of a last-ditch attempt to pass a slimmed-down 2026 budget.
PROPOSAL NEEDS FINANCIAL OFFSET
"I will propose to parliament, starting this autumn, that we suspend the 2023 pension reform until the presidential election," Lecornu told lawmakers. "No increase in the retirement age will take place from now until January 2028."
Lecornu said the suspension would cost 400 million euros ($463 million) in 2026 and 1.8 billion euros ($2.1 billion) in 2027.
"It must therefore be financially offset, including through savings measures," he said. "It cannot come at the price of a larger deficit."
Macron's 2023 pension reform was rammed through without a vote in parliament after weeks of street protests. It gradually raises the age at which a worker can retire on a full pension from 62 years to 64.
LEFTIST PARTIES WELCOME THE MOVE
Leftist parties had been threatening to join the far right and far left to oust Lecornu if he did not suspend the pension reform, but they welcomed his concession on Tuesday.
Both the Socialists and the Communists said they would not vote Lecornu out, as did the conservative Republicans who have been wary of rising spending.
Socialist parliamentary chief Boris Vallaud described the suspension as "a victory" but said his lawmakers would seek to reshape the "unbearable and inadequate" budget in parliament.
Lecornu is proposing more than 30 billion euros ($35 billion) in savings, and targeting a deficit of 4.7% in 2026. France's independent fiscal watchdog said those plans were based on rosy economic thinking.
French stocks, particularly bank shares, rose on news of the suspension, while government borrowing costs extended the day's decline. European Central Bank President Christine Lagarde said she didn't see any sign of disorder in the euro zone bond market despite the ongoing budget crisis in France.
FRENCH NOBEL LAUREATE WANTS COMPROMISE
Lecornu, 39, was France's shortest-serving prime minister in modern times before he retook the job late last week after resigning. Macron, who has burned through prime ministers in recent months, had refused to call another election or resign.
French economist Philippe Aghion, named one of the three winners of the 2025 Nobel Prize in Economics on Monday, said a path out of the budget mess was needed.
"I hope there will be a compromise because the tragedy for France is to experience political instability," he told reporters in Paris prior to the suspension announcement.
"If there is another censure, it would be dramatic for France. Our interest rates would continue to rise, our spread would continue to rise, it would be dramatic. We must absolutely avoid censure and still arrive at a budget."
($1 = 0.8632 euros)
(Additional reporting by Paris Newsroom; Writing by Gabriel Stargardter; Editing by Alison Williams and Richard Lough)
Pension reform refers to changes made to a country's pension system, often aimed at ensuring its sustainability and adequacy for future retirees.
A financial crisis is a situation where the value of financial institutions or assets drops significantly, leading to widespread economic instability.
Economic growth is the increase in the production of goods and services in an economy over a period, typically measured by GDP.
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