France presents 2027 budget as minority government faces parliamentary test

France’s 2027 budget has reached parliament after Prime Minister Sébastien Lecornu’s government presented draft budget bills to the Council of Ministers on Oct. 1. The plan aims to bring the deficit to 5% of gross domestic product next year, but the minority government faces a difficult parliamentary vote and heightened scrutiny from bond investors.

The government has described the plan as a roughly €54 billion fiscal effort intended to restrain the deficit. For investors, the immediate issue is political as well as fiscal: Lecornu does not have a governing majority, and two previous administrations were removed in no-confidence votes during earlier budget disputes.

Why is France’s 2027 budget politically risky?

France’s National Assembly has been fragmented since President Emmanuel Macron’s July 2024 snap election failed to produce an absolute majority. The chamber includes the far-right National Rally, the left-wing New Popular Front and Lecornu’s center-right grouping, according to CNBC.

That split has made budgets a recurring test of whether the government can survive. Administrations fell in no-confidence votes in December 2024 and September 2025. Lecornu used a constitutional provision to pass the 2026 budget in February, CNBC reported.

The proposed 2027 package will now face parliamentary debate. Politico reported that parties have added reason to draw sharp distinctions as the presidential election approaches in spring 2027. Eurasia Group’s Mujtaba Rahman said a tough budget draft could bring down the government, though that remains an analyst’s assessment rather than a confirmed outcome.

A large fiscal target with an important qualification

Lecornu has described the 2027 plan as containing €54 billion in savings. He said the deficit could reach 6.5% of GDP without cost-cutting measures, while the government is targeting a 5% deficit next year, Politico reported.

Later reporting from Eurasia Business News described the figures more narrowly: €43 billion of new adjustment measures for 2027, rising to about €54 billion when measures from previous years are included. The reporting does not fully align on the composition of the €54 billion total, but it consistently describes an effort to reduce the deficit.

France’s finance ministry projected public debt at 119.3% of GDP in 2026 and 121.7% in 2027. It also forecast a 5.4% deficit for 2026, Reuters reported.

What are bond markets signaling about France?

French government borrowing costs have risen as investors assess the country’s public finances and political uncertainty. CNBC reported that the yield on France’s 10-year government bond moved above 4.5% for the first time since 2008 and was quoted at 4.6696% on the Thursday referenced in its Sept. 24 report.

The gap between France’s 10-year yield and Germany’s exceeded one percentage point for the first time since the 2012 euro-zone debt crisis. CNBC said investors were demanding greater compensation to lend to France than to Germany, while Reuters described investor unease over France’s fiscal position ahead of next year’s election.

Lecornu must now seek enough support for a budget that demonstrates deficit restraint without triggering a parliamentary defeat. The outcome of that process remains uncertain.

This story draws on original reporting from CNBC.