France: Deadlock Continues in Government Formation and Budget Process

French Prime Minister Sebastien Lecornu is holding critical talks today, Friday (3.10.2025), with lawmakers as he struggles to pass the 2026 budget and retain power. The fifth prime minister in two years, Lecornu is seeking silent support from opposition groups to avoid being ousted by a divided National Assembly during upcoming debates on next year’s finance bill. Today’s negotiations represent the last chance for compromise before Lecornu must form a government and present a budget draft by October 13, allowing parliament to adopt legislation by year-end. Political opponents have warned they will vote to remove him unless major concessions are made. Ahead of the talks, Lecornu pledged his government would rule out using a constitutional measure that allows passing laws like the budget without parliamentary approval—a long-standing demand of the Socialist Party and others. “In a functioning Parliament, reflecting the divisions of the French people, we cannot impose our will or force the opposition,” Lecornu said in a brief televised statement, stressing the need to adopt the budget by year-end. However, his announcement has not yet convinced Socialist Party leaders. Failure to appease opposition groups increases the risk of a third government collapse in under a year, plunging France back into deadlock amid the eurozone’s largest fiscal deficit. Successive prime ministers have struggled to maintain authority since President Emmanuel Macron’s decision to call snap elections last year resulted in a fragmented National Assembly. This political and fiscal instability has triggered massive sell-offs of French assets, raising the country’s borrowing costs compared to other European nations and weighing on investment and household and business spending.