France faces budget deadlock as Macron government confronts rising deficit

The French government is confronting its toughest fiscal showdown in a decade as it seeks parliamentary approval for a new budget before the September deadline. Finance Minister Roland Lescure and Prime Minister Sébastien Lecornu warned that the deficit could climb to as high as 6.5% of GDP without a revised budget, while the target to bring the shortfall down to 5% of GDP this year is now in doubt. Failure to secure an agreement could postpone the budget’s enactment until the end of 2027, leaving the next administration with limited fiscal tools.

The standoff follows the collapse of two previous prime ministers in 2024 over budget disputes and comes amid an approaching presidential election that has boosted support for far‑right parties. Markets have already priced higher risk on French sovereign debt, with ten‑year bond spreads widening. Over the next decade, public debt is projected to increase by more than €1.25 trillion, driven by past crisis spending on the Yellow Vests protests, the Covid‑19 pandemic and the 2022 energy crisis. Analysts say the outcome will be closely watched by investors and could shape France’s economic and political trajectory.