A small majority in the Assemblée Nationale, the French parliament, agreed on Tuesday evening to the financing of social security, part of the state budget. 247 MPs voted in favor, 234 against. The proposal now goes to the Senate. French media report this. About 40 percent of French government expenditure goes to social security.
France is now 22 billion euros short of financing social security. The government will have to borrow that astronomical amount. If the proposal had not passed, the deficit would have risen to approximately 30 billion euros. That would lead to “a political, economic and social crisis,” warned the Minister of Labor, Jean-Pierre Farandou, earlier.
The result is a windfall for Prime Minister Sébastien Lecornu of the social-liberal Renaissance – the party of President Emmanuel Macron. Lecornu must pass a state budget for 2026 through parliament before the turn of the year. Later this month, no later than December 23, parliament will vote on the entire budget.
The prime minister wants to reduce the French budget deficit, which rose to 5.8 percent of gross domestic product last year, to below 5 percent of GDP. According to the European Union, it would be better for member states not to exceed 3 percent of GDP at all. It is by no means certain whether the prime minister will be able to convince enough parties of his plans.
If Lecornu is unable to get a majority to vote in favor of the budget, France will have no state budget for the second year in a row. Resulting in a possible increase in interest rates on loans. The government desperately wants to prevent that scenario because of the French national debt 114 percent of GDPwhich is well above the European limit of 60 percent.
On Tuesday, Lecornu managed to get the Socialist Party (PS) on board by freezing the increase in the retirement age from 62 to 64, a fervent wish of President Macron, until after the 2027 presidential elections.
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In an ultimate attempt to realize a budget for 2026, Prime Minister Lecornu is temporarily sweeping the controversial pension reform off the table
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