French lower house rejects income measures, budget moves to Senate

The French National Assembly rejects the income part of the 2026 budget today, a setback for the government as it seeks to present a finalized spending plan before the end of the year. The taxation measures at the center of the dispute now proceed to the Senate, where majority control is expected to produce a different set of amendments and intensify the need for cross chamber negotiation.

The decision underscores the political fragmentation in the current parliament and raises questions about whether lawmakers can reconcile competing priorities under pressure from investors who have urged tighter public finances. The contested income section deals with changes to tax provisions that are central to the government strategy to reduce the budget deficit and provide fiscal clarity to markets and households.

Senators are expected to strip out many of the amendments that the National Assembly added, setting up a potential clash when both chambers must sign off on identical text for the budget to pass without recourse to special constitutional powers. Once the Senate completes its review, which is scheduled to take place in the coming days, a joint committee of deputies and senators will convene to try to broker a compromise acceptable to both bodies.

The outcome will determine whether the government can avoid invoking extraordinary constitutional mechanisms to force the budget through, a step that would carry political costs and could heighten uncertainty for investors and the wider economy. Lawmakers face a narrow calendar, with only weeks to resolve differences and present a unified budget before the new fiscal year begins.

Finance Minister Roland Lescure emphasizes the possibility of agreement, framing the parliamentary process as ongoing. "We are only halfway through the parliamentary process, and I remain convinced that a compromise can be reached," he says in a statement. "I remain confident that the majority of parliamentary groups will be able to find the necessary common ground to enable our country to have a budget and to approach 2026 with stability and visibility for our businesses and our fellow citizens."

Policy stakes extend beyond the immediate passage of fiscal measures. If unresolved, the dispute could delay tax certainty for households and corporations, complicate planning for public investment projects, and create volatility in borrowing markets where investors are sensitive to perceived fiscal slippage. The government argues that the proposed income measures are necessary to demonstrate fiscal discipline and reassure credit markets.

Parliamentary leaders will now shift to negotiating strategy, with the Senate review likely to reshape key provisions and the joint committee serving as the primary forum for compromise. The coming days will test the capacity of France's fragmented political landscape to produce the sustained majorities needed to pass complex fiscal legislation and provide the clarity that markets and citizens expect going into 2026.