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French PM announces new budget plans in bid to break deadlock
Published by Global Banking & Finance Review®
Posted on January 16, 2026
3 min readLast updated: January 19, 2026
Global Banking & Finance Review®
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Published by Global Banking & Finance Review®
Posted on January 16, 2026
3 min readLast updated: January 19, 2026
French PM Sebastien Lecornu announces revised budget plans to resolve political deadlock, focusing on income boosts and potential legislative strategies.
By Sudip Kar-Gupta and Ingrid Melander
PARIS, Jan 16 (Reuters) - French Prime Minister Sebastien Lecornu announced on Friday a series of amendments to his draft 2026 budget, seeking to win the backing of the Socialist Party with steps to boost the income of poorer workers, students and pensioners.
After three months of talks in parliament on the budget failed to yield an agreement, ministers in Lecornu's government had said he would announce updated budget plans, but also that he had no choice but to bypass parliament and that he would soon announce how he would do that.
Instead, Lecornu said he still wanted to try and strike a deal with other parties.
SEEKING A DEAL
"I want to say it clearly: we will not give up on reaching a compromise. And we will continue to work with the parliamentary groups that have the courage to put the general interest above their partisan interests," he said in an address to the nation.
"This is the moment of great clarification for every political force. And for the government, it is the time to set new budgetary directions to avoid a deadlock."
Lecornu did not say how he would pass that new budget and whether he would still opt eventually to bypass parliament.
Among the steps announced, Lecornu said the new draft budget would no longer cut a tax rebate on pensions, and that a monthly income supplement benefit for low‑income workers would rise by some 50 euros per month for some 3 million households.
Cheap meals for students in university canteens would be extended, and steps would also be taken to boost affordable housing.
The budget deficit would be no higher than 5% of GDP, and would possibly be lower, Lecornu added.
It remains to be seen how political parties will react and whether the parliamentary deadlock can be broken. Investors and ratings agencies are closely monitoring Lecornu's efforts to reduce France's fiscal deficit, the highest in the euro zone.
NO EASY WAY TO BYPASS PARLIAMENT
The government has suspended budget talks in parliament until Tuesday.
If the new measures are not enough, Lecornu could choose to invoke Article 49.3 of the Constitution, which allows the government to push through the bill without a vote, unless lawmakers back a vote of no confidence - in which case the government falls and there is no budget.
The alternative could be to invoke Article 47 - an executive order also allowing the government to pass the budget without a vote.
With that second option, which has never been used to pass a finance bill, the budget would be adopted independently of whether motions of no confidence succeed.
But using Article 47 is not necessarily the easier option, not least because the Socialists, whose support is key, are firmly against it as the government would have to use the original bill, stripped of the many amendments added at their request.
France's political situation has been fragile since 2022, when President Emmanuel Macron lost his majority in parliament.
His problems worsened when he called early legislative elections in mid-2024, only to deliver a hung parliament split between three distinct ideological blocs: his centre-right alliance, the left, and the far-right National Rally.
(Additional reporting by Elizabeth Pineau, Louise Rasmussen, Dominique Vidalon, Inti Landauro, Michel Rose; Writing by Leigh Thomas and Ingrid Melander; editing by Toby Chopra and Gareth Jones)
The main topic is the announcement of revised budget plans by French PM Sebastien Lecornu to resolve a political stalemate.
Key amendments include income boosts for poorer workers, students, and pensioners, and maintaining a budget deficit target of 5% of GDP.
The government may use Article 49.3 or Article 47 to pass the budget without a parliamentary vote.
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