France has a budget. Those four words, unremarkable in most democracies, carry enormous weight in a country that has spent nearly two years in fiscal limbo. On February 2, the National Assembly rejected two no-confidence motions — one from the left, one from the far right — clearing the way for the 2026 finance bill to pass and offering the first real moment of political stability since President Macron's disastrous snap election in 2024.
The left-wing motion, tabled by France Unbowed and the Greens, drew 260 votes — 29 short of the 289 needed to topple the government. The far-right motion secured only 135. The results confirmed that Prime Minister Sébastien Lecornu, whose chaotic two-stage nomination in October had drawn widespread ridicule, has managed what his two predecessors could not: building a working legislative coalition.
What's in the Budget
The 2026 finance bill aims to cut France's deficit to 5% of GDP, eased back from an earlier target of 4.7% that proved politically untenable. It includes higher taxes on some businesses, expected to generate approximately €7.3 billion in additional revenue, though the Socialists' proposal for a wealth tax on the super-rich was ultimately dropped.
The centrepiece is a €6.5 billion increase in military spending, which Lecornu described as the "heart" of the budget — a reflection of the broader European push to rearm in the face of Russian aggression and American disengagement. France is under pressure from the EU to rein in its debt-to-GDP ratio, currently the bloc's third-highest after Greece and Italy and approaching double the Maastricht ceiling.
How Lecornu Survived
The key to survival was the Socialist Party. Lecornu secured their support through targeted concessions — costly but specific enough to avoid alienating the centre. The Socialists extracted gains on social housing, minimum wage adjustments, and protections for low-income households, while accepting the broader framework of fiscal consolidation. It is a fragile alliance, built on transactional necessity rather than ideological alignment, but it has proven sufficient.
The far right, meanwhile, found itself isolated. Marine Le Pen's Rassemblement National, which had helped bring down the previous government, calculated that another government collapse would damage its own standing with voters fatigued by instability. The resulting 135-vote motion was performative rather than serious — a signal of opposition without the commitment to follow through.
What It Means for Business
For the French business community and international investors, the budget's passage offers welcome clarity after months of uncertainty. Bond markets, which had shown signs of stress as France's political paralysis dragged on, are expected to stabilise. The budget maintains France's R&D tax credits — a crucial incentive for the startup ecosystem — and preserves the framework of the France 2030 investment programme.
However, the higher corporate taxes will weigh on some sectors, and the failure to pass a more ambitious deficit reduction plan means that France's fiscal credibility remains under scrutiny. Rating agencies are watching closely, and another downgrade would raise borrowing costs further.
A Fragile Equilibrium
The 2026 budget does not solve France's structural problems. The hung parliament remains. The deficit is still far above EU limits. Public debt continues to climb. But it does something that has eluded French politics for two years: it provides a functioning government with a legal basis to spend, tax, and govern. In the current climate, that passes for a breakthrough.