France’s 2026 budget has come under early fire from the country’s independent fiscal watchdog, the Haut Conseil des Finances Publiques (HCFP), which warned on Tuesday that the government’s economic projections are overly optimistic and that its planned savings may be unrealistic. The warning comes as newly reappointed Prime Minister Sébastien Lecornu scrambles to finalize and submit the draft budget to parliament before constitutional deadlines expire.
The budget central to President Emmanuel Macron’s effort to restore fiscal credibility after years of heavy post-pandemic spending aims to cut the public deficit to between 4.7% and 5% of GDP, down from this year’s 5.4%. However, the HCFP said the plan relies too heavily on “uncertain and unverified assumptions” about economic growth and revenue collection.
Why It Matters
The watchdog’s concerns raise doubts about whether France can realistically meet EU fiscal rules that require countries to move toward a deficit below 3% of GDP. With financial markets already jittery and France facing possible credit rating downgrades, any signs of fiscal slippage could rattle investor confidence and increase borrowing costs.
The credibility of France’s economic management is also on the line at a politically fragile moment. Lecornu’s government, reshuffled just days ago, still lacks a clear parliamentary majority, making it harder to push through unpopular spending cuts and tax reforms.
French Government: Facing pressure to balance fiscal restraint with social and political stability ahead of the 2026 review.
Prime Minister Sébastien Lecornu: Tasked with navigating a divided parliament to pass the budget before procedural deadlines.
Fiscal Watchdog (HCFP): Warns that France’s assumptions about growth and deficit reduction are “not credible.”
European Union: Closely monitoring France’s compliance with EU deficit rules amid wider concerns about fiscal discipline in the bloc.
Investors and Rating Agencies: Moody’s and S&P are set to review France’s credit outlook in the coming weeks, with potential downgrades looming if fiscal risks grow.
What’s Next
The proposed €30 billion in spending cuts and tax measures including the end of certain corporate tax breaks, tighter welfare rules, and a new parcel tax will face heavy political scrutiny. The government’s challenge will be balancing deficit reduction with public tolerance for austerity as social discontent simmers over rising living costs.
Analysts expect that if the budget faces major parliamentary hurdles, Macron’s administration may once again invoke Article 49.3 of the French Constitution, allowing it to push the bill through without a vote a move that could deepen political divisions.
With information from Reuters.
