MediumIV Macro Policy & Sovereign Debt4 November 2026, Wednesday
French National Assembly unanimously rejects revenue side of 2027 budget
The National Assembly rejected the revenue section of the 2027 budget bill by 458 votes to 0 on the evening of 4 November. The spending section will not be debated, and the government's original text goes to the Senate on 20 November.
Amendments passed by shifting majorities had altered the revenue section so much that, in LCP's words, the text no longer suited any group. According to Finance Minister David Amiel, had the text been adopted as amended, the budget deficit would have reached 177.1 billion euros. That would have been 20.7 billion euros worse than the government's original text, lifting the public deficit from 5% of GDP to 5.9%. The social security budget was also rejected on 23 October and goes to the Senate on 9 November.
Prime Minister Lecornu has 3 options. After the Senate reading, a compromise could be sought in a joint committee. The government could force the text through under Article 49.3 of the constitution, which allows adoption without a vote, but that opens the door to a motion of censure. If parliament fails to adopt the bill within 70 days of its submission, the budget can be enacted by ordinance; this year the deadline expires at midnight on 17 December.
Markets saw the vote after the close. According to Ideal Investisseur data, the 10-year OAT closed at 4.88% and the Bund at 3.32% on 4 November, and the spread narrowed from 161.8 basis points on 3 November to 156.0. When Fitch revised its outlook to negative on 30 October, it forecast a 2027 deficit of 5.5%, above target.
Talay assessment
Bottom line
The unanimous rejection shows that the Assembly cannot write a budget and is leaving the decision to the government. The government can use 49.3 or enact the budget by ordinance after 17 December; both preserve the 5% target but carry different political costs. The likeliest path is that the joint committee fails after the Senate reading and the budget passes via 49.3 or ordinance.
Likely effects
- French borrowing costsNegative1–6 months
The ordinance route preserves the target but weakens the commitment to consolidation until the 2027 election; the OAT–Bund spread will struggle to settle below 156 basis points.
- Government stabilityNegativeWeeks
Using 49.3 opens the risk of censure; if the government falls, the spread could retest its late-October peak of 174 basis points.
- TürkiyeNegative1–6 months
Prolonged fiscal uncertainty in France weakens euro-area demand and reduces order visibility for Turkish exporters.
Possibilities, ranked
- 149.3 or ordinance60%
The Senate passes its text after 20 November, no compromise emerges, and the budget takes effect via 49.3 or by ordinance after 17 December.
Watch: The joint committee outcome and the 17 December deadline
- 2Joint committee compromise25%
A compromise with the opposition is reached on the Senate text and the budget passes by vote.
Watch: The Assembly vote on the joint committee text
- 3Censure topples the government15%
A censure motion against the use of 49.3 passes and the government falls.
Watch: The vote count on the censure motion
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Vote▲ 458–0
- Deficit in amended text▲ 5.9% of GDP
- OAT–Bund (4 Nov)▼ 156.0 bp