Summary:
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France warns 2026 budget may be delayed past March elections
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Confidence votes next week threaten government survival
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Possible National Assembly dissolution if government falls
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Budget talks already late amid deficit concerns
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Political uncertainty weighs on fiscal credibility
France budget risks delay as confidence votes threaten government stability
France’s fragile fiscal outlook is back in focus after Budget Minister Amélie de Montchalin warned that adoption of the country’s 2026 finance bill could be pushed back until after municipal elections in March if lawmakers topple the government in confidence votes expected next week.
Speaking in a televised interview on Sunday, de Montchalin said the collapse of the government would make it “impossible” to pass a budget before the local elections, underscoring the political risks hanging over France’s already-delayed fiscal process. Her comments follow remarks from another cabinet minister suggesting President Emmanuel Macron would dissolve the National Assembly and call snap legislative elections if the government loses a no-confidence vote.
France has been operating under heightened political uncertainty since Macron lost his parliamentary majority, forcing the government to rely on fragile alliances and procedural tools to advance legislation. Budget negotiations for 2026 are already running late, against a backdrop of persistent deficits, rising debt servicing costs and growing scrutiny from ratings agencies and EU fiscal authorities.
Tensions escalated on Friday after the far-right National Rally and the left-wing France Unbowed jointly called for parliamentary confidence votes tied to opposition to the EU’s Mercosur trade agreement with Latin America. While the trade deal itself is unlikely to be decisive, it has become a political flashpoint for parties seeking to weaken the government.
If the government falls, attention would quickly shift to the risk of snap elections, further delaying fiscal decision-making and complicating France’s commitments to rein in deficits under revised EU budget rules. Municipal elections in March already limit lawmakers’ appetite for tough fiscal choices, increasing the likelihood of a prolonged budget vacuum.
For markets, the renewed political instability raises concerns about France’s fiscal credibility, with implications for OAT spreads, euro sentiment and broader confidence in Europe’s ability to deliver disciplined budget policy amid slowing growth.
Snap election? Given the fractured politics in France it may not resolve anything.
This article was written by Eamonn Sheridan at investinglive.com.