The strategy, according to the executive, involves restoring confidence, strongly shaken by the political crisis that France has been plunged into since the early legislative elections in the summer of 2024.
French Prime Minister, Sébastien Lecornu, proposed increasing taxes on the richest and large companies by 6.5 billion euros in 2026, in response to socialists’ demands.
In the draft Budget for 2026, presented on Tuesday, the French executive foresees two new tax mechanisms aimed at large fortunes, from which he hopes to raise around 2.5 billion euros.
The first consists of a tax on financial assets that will be levied on non-professional assets integrated into holdings family members, with which he hopes to obtain around one billion euros.
Furthermore, an exceptional tax will be applied to those with annual income exceeding 250 thousand euros, with a rate of 3% or 4%, in order to ensure that the overall level of taxation for these taxpayers is at least 20%.
In parallel, the so-called “exceptional contribution” applied to large companies with turnover exceeding one billion euros (around 450 companies in total) will be extended next year.
These mechanisms, included in the budget project under the title “Fiscal justice effort”, respond to a large extent to the conditions imposed by the Socialist Party (PS) to refrain from presenting an immediate motion of censure and accept the parliamentary debate, together with the suspension of the 2023 pension reform.
The French PS, like the entire left, defends the creation of the so-called “Zucman tax”, which would tax at 2% all assets exceeding 100 million euros, which represent around 1,800 in France, which could raise around 20 billion euros per year.
As for the suspension of the pension reform, announced by the Prime Minister in his general policy speech to the deputies, it was an indispensable condition for the PS not to vote on the two motions of censure presented by the National Regroupment (RN, extreme right) and by Insubmissive France (LFI, radical left) that will be analyzed on Thursday in the National Assembly (parliament).
Lecornu acknowledged that this measure will have an associated cost of 400 million euros in 2026 and 1.8 billion in 2027, due to people who, from January 1st, will be able to continue to retire at 62 years and nine months, and not at 63, as predicted by the reform.
In reality, as admitted by the Ministry of Economy, the budgetary impact will be greater, as the additional expenditure on pensions will be combined with a lower tax and activity contribution from people who will retire earlier.
In the budget project, the executive plans to reduce the public deficit to 4.7% of the Gross Domestic Product (GDP) in 2026, after the peak of 5.8% in 2024 and the estimated 5.4% in 2025.
Lecornu granted a slight margin of maneuver for parliamentary negotiations, indicating that the deficit could be slightly higher, but guaranteed that, in any case, it will be below the threshold of 5% of GDP, fulfilling the commitment made with European Union partners to reduce the deficit to 3% of GDP by 2029.
This deficit predicted for next year will not, however, prevent the continuation of the increase in French public debt, which exceeded 115% of GDP in the second quarter and is expected to rise to 115.9% by the end of this year and to 117.9% in 2026.
All this under the condition that the main economic assumptions on which the plan is based are confirmed, namely 1% growth in 2026, for which Lecornu’s government intends to channel part of the high household savings rate (19%) into investment in the economy and also increase business investment.
This forecast is slightly more optimistic than those of the Organization for Economic Cooperation and Development (OECD) and the Bank of France (0.9%), coincides with that of the International Monetary Fund (IMF) and is below the European Commission (1.3%).
The strategy, according to the executive, involves restoring confidence, strongly shaken by the political crisis that France has been plunged into since the early legislative elections in the summer of 2024.
