[Global Times Special Correspondent in France Dong Ming] The new French government submitted the draft 2026 budget to the National Assembly on the 14th local time. French media said that after weeks of political crisis, France has ushered in a critical moment. Radio France Internationale reported that the latest version of the draft budget draws heavily on former Prime Minister Bayrou's previous plans, but reduces fiscal spending cuts. The French government plans to cut fiscal expenditures by about 35 billion euros in 2026, which is lower than the 43.8 billion euro reduction target proposed by the previous Bayrou government. Prime Minister Le Corny also said that it can accept reducing the public deficit to 5% of GDP, which is also higher than the Bayrou government's proposal of 4.6%. The New York Times reported on the 14th that multiple government reshuffles since last summer have caused damage to the French economy, and France urgently needs to pass the 2026 budget before the end of the year to restore investor, business and consumer confidence.

Le Corny's draft budget will implement "targeted and unconventional" tax increases for large enterprises, while small and micro enterprises will enjoy tax cuts. At the same time, it also involves large-scale layoffs in the public sector, freezing pension payments and temporary surtaxes for people with annual income exceeding 250,000 euros. However, the controversial "Zuckerman tax" was not included in the draft. The most concerned thing is Le Corny's announcement to suspend the reform of the retirement system until January 2028, which was previously strongly opposed by opposition parties. However, he also warned that the suspension of reform will increase financial pressure. It is estimated that the new expenditure will be about 400 million euros in 2026 and about 1.8 billion euros in 2027.

France and Guangzhou reported that this draft budget is still not very popular. According to a Reuters report on the 14th, the French fiscal watchdog, the Higher Commission for National Public Finance (HCFP), said that the government's 2026 budget plan is based on optimistic economic assumptions, and it is likely that revenue and expenditure savings measures will not be implemented in place if the new government collapses again. It is even impossible to implement it. At present, France's two major opposition parties, the far-right National Alliance and the far-left "Indomitable France", respectively, filed impeachment motions against the Lekorny government on the 13th. The National Assembly will review the relevant motions on the morning of the 16th.

According to the European Bureau of Statistics, France¡¯s budget deficit in 2024 is close to two times the EU¡¯s 3% ceiling, and its GDP ratio is approaching 118%, and the European Union¡¯s third-highest. In order to get public finances back on track, French President Macron has appointed five prime ministers in less than two years to cut deficits. But because of the loss of control over the Parliament, along with the opposition¡¯s strong opposition to budget cuts, the government has collapsed. Political turmoil in turn has curbed economic growth, pushing up French borrowing costs and increasing investor caution. The New York Times reports that investors now say they need to invest in France. The French economy has begun to slow down last year, with growth rates falling from 20231.4% to 1.2% in the year. According to

The governor of the French central bank, Francois de Gaulle, said last week that ¡°France has always been the head of the train in Europe, but now it¡¯s the final car.¡±14 On Monday, he reiterated that France needs drastic cuts in spending to reduce its deficits, which are exacerbating political unrest and shaking the bond market.