France Faces a Double Budget Vote on Oct. 27 as Bond Yields Top 5 Percent
France’s National Assembly will hold two budget votes in a single day on Oct. 27. A final, binding vote on the entire social security budget bill, which covers health care and pensions, overlaps on the same day with a vote on the revenue portion of the state budget bill. For the government of Sébastien Lecornu, a minority cabinet with no majority on either side, it is the first gate on which its survival hangs.
The mood on the streets ahead of the votes is cold. Last weekend, protests over the cost of living spread nationwide, with looting and arson in some cities and about 2,400 people arrested. Nighttime curfews were imposed in some cities. Anger built up over cuts to public services lies behind the protests.
A Debate on a Constitutional Clock
France’s budget deliberations move within a clock set by the constitution. The social security budget is given 50 days for parliament as a whole and 20 days for the National Assembly, and the Assembly’s deadline ends at midnight on Oct. 27. The state budget is given 70 days. If voting is not finished within the deadline, a path also opens for the government to put the budget into effect by decree without a parliamentary vote. That is why Oct. 27 is effectively the last line.
The social security budget bill was submitted on the 1st. Its goal is to cut the social security deficit from 21.8 billion euros this year to 12.7 billion euros next year. The Social Affairs Committee, the standing committee in charge, rejected the bill on the 16th, but the committee vote is advisory in nature, and the full chamber has continued deliberations on the government’s original text since the 20th. The social security administration said 3,030 amendments alone had been submitted to the plenary session. The Oct. 27 vote is the final, binding vote on those deliberations.
The state budget bill is slower. The vote on the revenue portion was originally scheduled for the 20th but was pushed to the 27th as amendments to debate piled up. Budget Minister David Amiel warned that amendments already adopted would widen the fiscal deficit by another 10 billion euros, Reuters reported. The government has set a goal of lowering next year’s fiscal deficit to 5% of gross domestic product through 54 billion euros in savings. This year’s deficit ratio is 5.4%, the largest level in the eurozone, according to Euronews.
The Card of Passage Without a Vote
The last card in the government’s hand is Article 49.3 of the constitution. If the prime minister declares that the cabinet’s confidence is staked on a bill, the bill is considered adopted without a vote. There is only one way to stop it. The opposition must file a no-confidence motion within 24 hours, and at least 289 of the National Assembly’s 577 members, a majority, must support it. If no no-confidence motion is filed or it is rejected, the bill passes as is; if it passes, the cabinet resigns en masse and the bill is discarded.
Prime Minister Lecornu has publicly vowed not to use this card on this budget. “There will be no 49.3 and no decrees. In the end, there will be a vote,” he said, according to Reuters. But some question the weight of that promise. The same promise he made when he took office last year was ultimately not kept during the processing of the 2026 budget, and the government passed the budget using Article 49.3 and then survived a no-confidence vote, France 24 reported.
The parties holding the key are the Socialists and the far-right National Rally. The Socialists, opposing cuts to medical spending and a pension freeze, filed a motion to reject the budget at the start of the debate, but it failed when the National Rally voted against it. Socialist spokesman Arthur Delaporte said, “The prime minister is making fools of us.” The Socialists demand a wealth tax aimed at the very richest, but Prime Minister Lecornu has rejected it and instead proposed a separate tax targeting holding companies, AFP reported. National Rally leader Marine Le Pen said she would oppose a plan that does not raise pensions in line with inflation but did not close off the possibility of abstaining, Reuters reported. With the Socialists drawing a line that they will not support this budget as they did the last one, Reuters analyzed that the budget’s fate could rest on the National Rally’s choice.
The Market Is Already Grading
The bond market moved before parliament. France’s 10-year government bond yield closed above 5% on the 21st, the first close above 5% since 2002, according to Le Monde. The yield gap with German bonds widened from 157 basis points on Wednesday to 164 basis points on Thursday morning, Dow Jones reported, citing data from market research firm LSEG. One basis point is 0.01 percentage point. The only time since the launch of the eurozone that this gap has reached this level was at the peak of the eurozone crisis in 2011, Le Monde reported.
Until May 2024, that gap stood at around 50 basis points. After parliament was dissolved that year it jumped to 80 basis points, then passed 100 basis points on Sept. 21 of last month and 140 basis points on Oct. 2, according to Le Monde. Markets are also watching a Moody’s sovereign credit rating review scheduled for Friday, TradingView reported.
If the Oct. 27 votes fail or miss the deadline, the government’s options narrow. It would have to pull out Article 49.3 again or implement the budget by decree, and either path could spread into a no-confidence standoff. Even if the social security budget gets through, the final vote on the entire state budget is scheduled for Nov. 17, with Senate deliberations remaining in between.
With the presidential election next April and May approaching and each party already beginning its election calculations, the room for compromise is narrower than last year, in Reuters’ assessment. The Oct. 27 votes will decide not only the fate of the two budget bills but also whether Lecornu’s approach itself, of passing the budget by vote, can survive.
