France's National Assembly unanimously rejected the government's 2027 budget on Wednesday evening, a day before nationwide strikes. Analysts told CNBC the government is highly likely to force the budget through without a parliamentary vote.
French lawmakers voted unanimously against adopting the 2027 budget drafted by Prime Minister Sebastien Lecornu's government. The vote came as the country's finances fuel widespread protests and worry bond markets.
The government is trying to appease its creditors by cutting the deficit sharply. Lecornu said in September he was targeting spending cuts worth 54 billion euros ($61.8 billion).
A fragmented Assembly blocks a normal vote
No single party holds a majority in the National Assembly, which makes agreement on fiscal policy difficult. Since the 2024 snap election produced a hung parliament, successive governments have used Article 49.3 of the constitution to force budgets through without a vote. Lecornu secured the 2026 budget that way.
Analysts told CNBC the rejection makes the government highly likely to invoke special powers that allow legislation to pass without a vote. Charlotte de Montpellier, senior economist for France at ING, said the rejection was "not a surprise at all", according to CNBC.
Deficit and debt keep pressure on bonds
France's budget deficit measured 5.1% of GDP in 2025, and concerns about it have put French government bonds, known as OATs, under extreme pressure this year. National debt amounted to 115.6% of GDP in 2025.
De Montpellier said the proposed measures were unlikely to deliver a drastic deficit reduction regardless of what comes next. She said the deficit will be higher than 5% next year because growth is much weaker than expected.
Strikes and policing
Nationwide strikes were due on Thursday, with hundreds of thousands of people expected to join demonstrations over the rising cost of living. Interior Minister Laurent Nuñez said 70,000 police and gendarmes will be deployed to quell any outbreaks of violence.
Reuters reported that tear gas was fired at demonstrators in Lyon.
Source: CNBC
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