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Last Tango in Paris: As Macron’s Presidency Is Over, What’s Next?

On Monday, 19 January, after weeks of discussions with parliamentary forces, French Prime Minister Sébastien Lecornu announced his intention to invoke Article 49.3 of the Constitution in order to enact the 2026 budget law. The use of this provision – which Lecornu had ruled out in past months – allows the government to “bypass” a vote in the legislative chamber while simultaneously granting Parliament the possibility to vote on a motion of no confidence against the executive; such a motion was promptly presented by La France Insoumise (LFI) and the Rassemblement National (RN). Unlike what happened with Michel Barnier – who was ousted in 2024 precisely following the use of Article 49.3 –, Lecornu managed to “survive” the motions from LFI and RN, as the Socialists did not support the action taken by the other opposition forces. This indirect support provided by the Socialist Party (Parti Socialiste) to the government is not surprising and is the result of a series of measures adopted by Lecornu’s cabinet in recent weeks/months. These concessions prevent another change of occupant at Matignon but, it is reasonable to say, do not help correct the (dangerous) trajectory followed by the French economy.

A compromise to survive

The budget law drafted by the government caters to several “priorities” of the Socialist Party. Among them, are the decision to reduce the cost of meals for students to 1 euro, the creation of additional jobs within the school system and increased investment in social housing. Other measures appreciated by the Socialist Party include the indexing of tax rates to inflation – a step that prevents the so-called fiscal drag –, an increase in resources for low-income workers and the maintenance of the current income tax deduction for retirees. On the revenue side, still in an effort to appease progressives, the government has focused in particular on the corporate sector, for example by renewing the extra taxation on the profits of large companies and scaling back certain previously announced tax cuts – decisions that, unsurprisingly, provoked negative reactions from business representatives.

To these concessions made by Lecornu to the Socialist Party, another one from a few months ago – perhaps the most significant – should also be added: the suspension of the pension reform adopted by the Borne government in 2023. Indeed, the full implementation of this measure – which entails an unpopular (but unavoidable) increase in the retirement age – has been postponed by the current administration until January 2028, after the next presidential elections have taken place.

The growing debt burden

The compromise reached on the budget law is expected to lead in 2026 to a modest reduction in the deficit-to-GDP ratio, which would remain among the highest in the Eurozone. According to government forecasts, the deficit is expected to fall from 5.5-5.4 per cent in 2025 to 5 per cent this year – a figure well above the 3 per cent threshold established by the Maastricht Treaty and also higher than the 4.7 per cent “submitted” just a few months ago by the government to the European Commission. The debt-to-GDP ratio, on the other hand, is expected to rise from 117.7 per cent (recorded in the third quarter of 2025) to 118.2 per cent – nearly double the 60 per cent limit set by Eurozone rules and well above the 98 per cent recorded at the end of 2019 (the year before the outbreak of the Covid-19 pandemic). Against this backdrop of expansionary fiscal policy, GDP growth is expected to remain limited, estimated by various sources at around 1 per cent – below the European average.

These figures highlight a complex macroeconomic situation that inevitably affects the perceived risk associated with French public debt securities. In this regard, in recent months, several rating agencies have downgraded Paris’s finances, and the OAT-Bund spread has reached levels comparable to those of Italian government bonds. In this challenging context, however, French debt interest rates remain low in absolute terms. This is largely due to the current economic situation in the Eurozone (characterised by contained inflation) and the widespread belief that the European Central Bank could intervene, if market tensions arise, to prevent a rise in sovereign bond yields. Nonetheless, assuming that this situation carries no risks would be misleading. Indeed, the Transmission Protection Instrument – which allows the ECB to act as a Lender of Last Resort in favour of a member state – can only be activated if the country de quo complies with the Eurozone economic governance framework: given France’s current macroeconomic and political conditions, in this scenario, such compliance cannot be taken for granted.

A fragmented political landscape

In order to successfully reorient the trajectory of French public finances – and to implement the unpopular measures necessary to achieve this goal – Paris would need a stable government. However, since the legislative elections of 2024, the Parliament has been divided into three blocks of roughly equal weight, showing little willingness to engage in dialogue or assume shared responsibilities. In particular, the two most extreme wings of Parliament, La France Insoumise and the Rassemblement National, appear to be solely focused on the upcoming presidential elections and are limited to pursuing their own partisan political agendas.

The inevitable consequence of this is the formation of fragile minority governments led by centrists, which must periodically make concessions to the Republicans and Socialists with the aim of surviving. In this scenario, it is unsurprising that debt continues to grow and that political parties persist in what François Bayrou, the previous Prime Minister, has described as a “fatal tango” pushing France towards “the edge of the precipice”. A precipice that, in the months ahead, will likely loom even closer, since in the run-up to the 2027 presidential elections, the parties in Parliament will almost certainly be tempted to advance further targeted spending requests to boost their electoral support.

Time to turn off the music

Since 2024, when the Parliament took on this fragmented configuration, calls for early presidential elections have been multiplying – most recently, even from former Prime Minister Édouard Philippe, an ally of Macron who openly aims to succeed him. The occupant of the Élysée Palace, whose personal approval ratings have been steadily declining, has so far held the line, partly for personal reasons (Macron cannot run for a third consecutive term) and partly in the hope of reversing an electoral trend that, according to polls, has seen the Rassemblement National surpass 30 per cent of the voting intention. In this complicated economic context, however, the departure of the politician from Amiens can no longer be postponed; only with such a change can France attempt to overcome this deadlock, entrusting a new political figure – supported by solid parliamentary backing – with the responsibility of steering the country out of stormy waters. And once new presidential elections are called, in order to avert the rise to power of the Rassemblement National or La France Insoumise, the moderate forces (Les Républicains and the centrist parties) should converge on a single candidate (for example, the above-mentioned Philippe) from the very first round, replicating a unity that, in recent years of parliamentary activity, has already repeatedly manifested itself in practice; failing to act in this way, according to opinion polls, there would be a serious risk of witnessing a runoff between Jordan Bardella (or Marine Le Pen) and Jean-Luc Mélenchon.

Navigating on sight, seeking ad hoc compromises in this fragmented parliament, only worsens the already complex state of French public finances and inflates the support (and the chances of reaching the Presidency) of the populist forces that the government seeks to keep away from power.


Matteo Bursi is a Research Fellow in the ‘Multilateralism and global governance’ programme at the Istituto Affari Internazionali (IAI).