French Minister in charge of European Affairs: Resuming the meeting in January is the key, and I am confident that the 2026 budget impasse will be broken

The Zhitong Finance App learned that France's minister in charge of European affairs, Benjamin Haddad, said that when the parliament resumes in January to begin a new round of negotiations, he is full of confidence in the smooth passage of the 2026 budget. In a joint interview with Guy Johnson and Anna Edwards, Haddad made it clear: “We expect to reach a compromise on budget-related matters acceptable to all parties in early 2026.”

The French government plans to hold a meeting on Monday evening. At that time, it will propose an interim bill aimed at continuing the current tax policy and key expenditure arrangements into the new year. On Tuesday, lawmakers will review this proposal. Judging from the current situation, it is expected that it will be successfully passed. It is worth mentioning that Parliament failed to reach an agreement during negotiations on the 2026 budget last week.

Haddad said, “There will be no government shutdown in France. When the parties are unable to agree on a budget, we have a special law as a guarantee to defer the previous year's budget. We will act accordingly in accordance with this law this week.”

According to information, a committee of the French Parliament failed to agree on the 2026 budget, causing discussions on the full fiscal plan to be postponed until the new year, which has heightened people's concerns about how the French government can control the deficit.

According to reports, on the morning of December 19, local time, a committee composed of seven members of the National Assembly and seven senators quickly abandoned efforts to coordinate the draft budget because there are still serious differences between the two houses and different political groups. French Prime Minister Sebastien Lecornu (Sebastien Lecornu) said he regretted that some members of parliament lacked the will to reach an agreement. He posted on social platforms: “Parliament will not be able to pass a budget for France before the end of this year. I deeply regret this; our fellow citizens should not bear the consequences.”

Despite this, France will not face the risk of an American-style government shutdown, as it can maintain critical spending and taxes through emergency legislation. The French government warned earlier this week that the content of the finance bill that has now been approved will only reduce the fiscal deficit in 2026 to 5.3% of economic output, down from 5.4% this year. In the initial plan, Le Corney set a goal of reducing the deficit to 4.7%, but since then he said the deficit should be kept within 5%.

But at the same time, Bank of France Governor Francois Villeroy de Galhau (Francois Villeroy de Galhau) warned that if plans to repair public finances fail to reduce next year's deficit to less than 5% of economic output, France may face a negative market reaction. On Friday, the yield premium on French ten-year treasury bonds was about 71 basis points compared to German treasury bonds for the same period. Previously, it had risen to more than 89 basis points in October.