French lawmakers strike down budget in unanimous vote as strikes hit streets

French lawmakers torpedoed the government's belt-tightening budget on Wednesday night, with the National Assembly voting unanimously against the 2027 spending plans drawn up by Prime Minister Sebastien Lecornu's team. The lower house is so fractured that no single party commands a majority, killing any hope of a normal passage. Analysts weren't shocked — just resigned.

Eurasia Group's Mujtaba Rahman told CNBC the vote was largely meaningless because the divided chamber was never going to wave the budget through the usual way. He argued it actually buys the government breathing room, giving Lecornu time to force a budget through next month using special constitutional powers. Charlotte de Montpellier, ING's senior economist for France, put it bluntly: no one believed it could pass. In the end, she said, the budget will have to go through without a formal vote.

The stakes are enormous. Lecornu has been chasing spending cuts worth 54 billion euros ($61.8 billion) to calm the bond traders who fund France's debt. The deficit hit 5.1% of GDP in 2025, and the national debt stood at 115.6% of GDP that same year. French government bonds — the OATs — have taken a beating all year as borrowing costs climb.

Deadlock is nothing new. Since a 2024 snap election produced a hung parliament, successive governments have leaned on Article 49.3 of the constitution to ram budgets through without a vote, though threats of no-confidence motions have forced concessions before. Another route — passing the budget by ordinance — has never been used in the Fifth Republic since it was created in 1958. If a government falls afterward, the budget it forced through stays put. Lecornu already used Article 49.3 to secure the 2026 budget after replacing ousted Prime Minister François Bayrou.

Meanwhile the streets are boiling. Violent protests have rocked France since late September, with demonstrations tipping into riots and looting in late October. What started as student anger over education funding has left more than 1 billion euros ($1.1 billion) in damages, and nationwide strikes were set for Thursday, with hundreds of thousands expected to march over the rising cost of living. The government is throwing 70,000 police officers and gendarmes at the problem, Interior Minister Laurent Nuñez said.

It didn't take long to get ugly. French media reported fires at some demonstrations on Thursday, with protesters carrying placards reading 'no to a France held by markets,' and Reuters reported tear gas fired at demonstrators in Lyon. De Montpellier said a government will struggle to fix the unrest the way France usually does, by buying social peace with more money. She said the outlook is quite bad — weak growth, sagging confidence, soft demand and investment — but pushed back on the doom: France is not Greece before the euro zone crisis, and it isn't collapsing.