France faces budget and political risks amid EU negotiations and 2027 election outlook

Negotiations are underway in Brussels regarding the European Union’s Multiannual Financial Framework for the 2028-2034 period. The European Commission is proposing a budget of approximately €2 trillion, which would involve increased national contributions. Under this proposal, the Common Agricultural Policy (CAP) may be restructured and integrated into a broader territorial development fund, raising concerns about potential subsidy reductions for the French agricultural sector.

Projected net annual contributions show significant divergence among member states. Germany is expected to be the largest net contributor with a projected annual net loss of €36.6 billion, while France faces a projected annual net loss of €18.1 billion. In contrast, Poland is projected to receive a net annual gain of €9.3 billion.

Simultaneously, political uncertainty surrounding France’s 2027 presidential election is beginning to impact financial markets. Analysts note a growing divergence between the CAC 40, which remains resilient due to its international exposure, and French small-cap companies. While European small caps have grown by 9% this year, French small caps have only progressed by 2%, suggesting investors are pricing in domestic political and fiscal risks.