Philippe Jouvin, a member of the French right-wing party Les Républiques, speaks at the National Assembly for the first reading of the 2027 national budget in Paris on November 4, 2026.
Ludovic Marin | AFP | Getty Images
French lawmakers rejected the government’s cost-cutting budget on Wednesday night as France’s finances fueled widespread protests and spooked bond markets.
Politicians in France’s lower house of parliament voted unanimously against adopting the 2027 budget drafted by Prime Minister Sébastien Lecornu’s government.
The government is trying to appease creditors, or bond traders, by sharply reducing France’s deficit and forcing lawmakers to approve sweeping spending cuts.
Lecorne said in September that he was targeting spending cuts worth 54 billion euros ($61.8 billion).
However, no party holds a majority in the Diet, and members from a variety of political backgrounds sit in the Diet, making it difficult to reach agreement on fiscal policy.
Since the 2024 snap general election rendered the parliament dysfunctional, successive governments have taken advantage of Article 49, Section 3 of the Constitution to forcibly adopt budgets without voting.
However, the threat of a no-confidence motion has forced concessions in the past. If the government is ousted, lawmakers will have to go back to square one with the budget.
Another option is to pass a budget by ordinance, which has never been done in France’s Fifth Republic, which was founded in 1958. Even if a government loses office after exercising this power, the budget imposed by that government remains in place.
L’Ecornu replaced ousted Prime Minister François Bayrou and secured a budget for 2026 under Article 49.3.
France’s national debt, known as OAT, has been under extreme pressure this year due to concerns about France’s budget deficit, which will reach 5.1% of gross domestic product in 2025.
The country’s national debt, which will reach 115.6% of GDP in 2025, is also a cause for concern as borrowing costs rise.
spreading anxiety
Violent protests have broken out across France since late September, with demonstrations disbanding into rioting and looting in late October. The incident, which began as a student protest over education funding, is thought to have caused more than 1 billion euros ($1.1 billion) in damages.
Hundreds of thousands of people are expected to take part in a nationwide strike on Thursday to express dissatisfaction with rising costs of living.
Protesters hold placards during a demonstration as trade unions strike alongside student-led demonstrations in Nantes on November 5, 2026.
Sebastian Salomgomis | AFP | Getty Images
Interior Minister Laurent Nuñez announced the deployment of 70,000 police officers and military police (military police) to quell the outbreak of violence.
French media reported on Thursday that arson broke out at some demonstrations and demonstrators were spotted holding placards reading “No to France ruled by the market,” while Reuters reported that tear gas was fired at demonstrators in the city of Lyon.
“There’s no easy way out.”
Analysts told CNBC that Wednesday’s rejection of the budget made it very likely that the French government would invoke special powers that would allow it to force the bill through without a vote in parliament.
Mujtaba Rahman, managing director for Europe at Eurasia Group, told CNBC in an email on Thursday that the vote “meant little in the sense that there was no chance of this divided parliament passing a budget in a normal way.”
“It will certainly help the government by using its special constitutional powers to give it time to prepare to pass a budget next month by ‘alternative’ means,” he said.
Charlotte de Montpellier, ING’s senior economist for France, agreed that the budget’s rejection was “not surprising at all”.
“No one believed we could pass the budget because Congress is so divided. There was no chance,” he said on a conference call, adding: “Ultimately the budget will have to be passed without a formal vote.”
Mr. de Montpellier noted that the French press seemed confident that the government would use its statutory powers to enforce next year’s budget, but said the proposed measures were unlikely to lead to a significant reduction in the budget deficit, regardless of what happens next.
“It’s clear that we’re not going to meet our budget goals anyway,” he told CNBC. “So even if we look at the budget[passing]next year’s GDP ratio will not be 5%. That’s not possible because growth is much weaker than expected. We’ll need more savings, and that’s not going to happen. So next year’s deficit will be over 5%.”
Mr de Montpellier told CNBC that the outlook for France was “pretty bad”, pointing to low economic growth, declining confidence and weakening domestic demand and investment, not to mention the anxiety that is reaching a boiling point across the country.
“There is no easy way out, because the usual way out of protests in France is to buy social peace, and that has been done in the past,” she said. “If you spend more money, things will go back to a more normal situation. But in this case, it’s a little harder to do that. So the unhappiness and emotions that we have now may remain a little bit more going forward.”
But he added that France was not on the verge of “collapse”.
“It’s a very difficult situation because there’s so much bad news, (but) it doesn’t mean that France is on the verge of collapse. We’re not in as much debt as Greece (before the eurozone crisis). In fact, we’re in a very difficult situation, but it doesn’t mean France is completely doomed,” de Montpellier said.
