The French prime minister has pledged to suspend president Emmanuel Macron’s unpopular pensions reform in a last-ditch attempt to secure parliamentary support for the 2026 budget and save his premiership.
In a big breakthrough for the left and a U-turn on Macron’s flagship economic policy, Sébastien Lecornu said on Tuesday that raising the retirement age to 64 would be suspended until 2027, when presidential elections are due.
But parties would have to agree on other savings to keep next year’s deficit at under 5 per cent of national output, he said.
“Is the government ready for a new debate on the pensions reform? The answer is yes,” Mr Lecornu told lawmakers in his first speech to parliament, in which he also promised additional taxes on companies.
READ MORE
The prime minister, who resigned last week only to be reappointed days later by Mr Macron as France’s political crisis spiralled, has struggled to meet the demands of various factions in the hung parliament in return for them backing his proposals on how to cut France’s high public deficit next year.
[ Emmanuel Macron calls for ‘stability’ as opposition threatens no-confidence voteOpens in new window ]
The Socialist Party, on whom Lecornu depends for his survival, had urged the government to freeze the controversial 2023 reform that raises the retirement age by two years to 64. The suspension would cost €400 million in 2026 and €1.8 billion in 2027, Lecornu said.
The concession means that Lecornu is likely to survive two no-confidence votes planned for Thursday, which have been put forward by far-left and far-right lawmakers, respectively.
French bonds rallied, pushing the 10-year borrowing costs down 0.07 percentage points to 3.39 per cent, their lowest level in two months.
France’s budget has become a central battleground in the country’s political crisis, crystallising arguments in a hung National Assembly.
Without an agreement, France can avoid a US-style shutdown and roll this year’s budget into 2026, but the disputes have unnerved markets already concerned by the gaping deficit and caused three French governments to fall in the past year.
Mr Lecornu’s commitments on pensions were applauded by socialist MPs, who said they would not vote down Lecornu as a result.
Leading lawmaker Boris Vallaud said: “This victory is a first step that enables us to envisage the next: blocking and repeal”, also calling on Lecornu to take bolder steps to increase taxes on big businesses.
For the premier to survive no-confidence votes and get his budget approved, he will also need some of the conservative Les Republicains (LR) to at least abstain.
Leading LR lawmaker Laurent Wauquiez said the country needed a budget before the end of the year, opening a narrow path towards the government surviving.
But in a sign of fracture between Lecornu and his former conservative allies, LR party leader and former interior minister Bruno Retailleau warned that the pension reform suspension was “an incomprehensible decision”.
“To avoid a no-confidence vote, the government is making French people pay a considerable price,” Mr Retailleau warned.
The premier outlined a €30bn fiscal package of spending cuts and tax rises, designed to take the deficit to 4.7 per cent of national output in 2026 from 5.4 per cent this year.
The prime minister said everything was up for debate, however, and the target could be eased, although he urged parties to agree to keep the deficit under 5 per cent.
While stopping short of announcing a sweeping wealth tax, which entrepreneurs had raised concerns about, Mr Lecornu said there would be an “exceptional contribution from large fortunes” and levies on holding companies that can sometimes escape taxes on dividends.
The government is set to extend a measure to raise corporate taxes, which had already been used in 2024 and 2025 to balance the budget but was supposed to be temporary — a move likely to alienate big French businesses.
“There will be tax cuts for small and medium businesses and there will be targeted and exceptional tax rises for some very large businesses ... to better share the efforts among contributors”, he said.
Throughout his address to parliament, Mr Lecornu also made another concession to the Socialist party. Repeating a pledge made prior to the collapse of his first government, he said he would not use the 49.3 constitutional clause that enables the government to force through legislation without a parliamentary vote.
“The government will propose, we will debate and you will vote,” he repeated on several occasions, raising the prospect of difficult debates on all elements of government policy.
- Copyright The Financial Times Limited 2025
