MNI: French Budget Deal Possible By Year-End But Chances Slim

France's joint Senate and National Assembly Budget Committee will hold a key meeting on Friday to hammer out a compromise on the country's 2026 budget but sources close to the talks told MNI that the chances of success are no better than 50/50. 

If the Senate and National Assembly can paper over their differences then a vote in the National Assembly could be held next week, but time is fast running out, sources said.  

"For the time being, it doesn't look very good. Chances of an agreement are quite slim - I would say 50/50," one source following the talks said.  

Quite apart from the Senate/National Assembly split is the stance of the government itself, which continues to resist backsliding on its 2026 deficit goal, well aware that slippage would throw into question the fiscal commitments it has made to Brussels and potentially risk market ructions. 

"The draft adopted on Monday by the Senate shows a projected deficit of 5.3% of GDP, which was deemed unacceptable by the government,” a source said.

NO DEAL AT ANY COST

Other sources following the talks said that the government is not in a mood to accept a deal at any cost, noting that it has been adamant that it does not want to see a deficit projection of more than 5% of GDP, although it seems to have accepted that it may end up a bit higher than the 4.7% contained in its original draft.  

Prime Minister Sebastien Lecornu may well be persuaded that his chances of achieving a deal with the assembly may improve in January. Events could unfold in a similar way to the winter of 2024/25 when a special bridging law was passed to allow the country to run on for a few weeks on the basis of its 2024 spend and tax limits. 

The hope would be that - as happened last year - intensifying pressure on MPs force them to resolve the budget impasse.