Sébastien Lecornu suspends pension reform and presents a tense 2026 budget

On October 14, 2025, Sébastien Lecornu, the French Prime Minister, was taking a big gamble in front of the National Assembly. In an unstable context where his government remains threatened by motions of no confidence, he presented the 2026 budget while announcing the suspension of the controversial 2023 pension reform and renouncing the use of Article 49.3.

A 2026 budget under pressure

The budget combines spending control and an increase in certain taxes to restore weakened public accounts. Adopted in the Council of Ministers, the draft Finance Bill (PLF) and Social Security Finance Bill (PLFSS) will be reviewed before December 31.

• Projected deficit: under 5% (slightly above the initial forecast of 4.7%)
• Estimated growth: 1% (up from 0.7% in 2025)
• Overall effort: ~€30 billion (17 billion in savings, 14 billion in new revenue)

Priority expenditures are maintained or increased:

• Defense: +€6.7 billion
• Interior: +€600 million
• Justice: +€200 million

Pensions and social benefits will be frozen, with the previous 10% reduction on pensions replaced by a €2,000 lump sum.

Taxation and measures for the wealthiest

• Differential contribution: minimum rate of 20% for 20,000 taxpayers, extended by one year
• New tax on 10,000 patrimonial holdings: €2.5 billion
• Surtax on profits of 400 large companies: €4 billion
• Progressive elimination of the CVAE (corporate value-added tax) by 2028

Pensions: suspension, age, and insurance duration

In his general policy speech, Sébastien Lecornu announced the suspension of the 2023 pension reform, which raised the legal retirement age to 64, until the 2027 presidential election. No increase in the retirement age or change in the insurance period (remaining at 170 quarters) will take place before January 2028.

This measure, estimated to cost €400 million in 2026 and €1.8 billion in 2027, will benefit 3.5 million French citizens and must be offset by savings.

A Conference on Pensions and Work will be organized in the coming weeks with social partners to reflect on the future of the system.

Pensions Focus: Legal Age and Insurance Period

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• Suspension of the 2023 reform until January 2028
  • Legal retirement age remains at 64
  • Insurance period remains at 170 quarters
• Details by generation:
  • 1963 and 1964: 170 quarters instead of the 171 originally planned
  • Early 1965: 170 quarters instead of the 172 initially planned
• Beneficiaries: 3.5 million French citizens
• Estimated cost: €400 million in 2026, €1.8 billion in 2027

This suspension ensures that the affected generations can retire at full rate without a reduction, maintaining the number of quarters initially set before the reform.

Between economy and political strategy

By renouncing Article 49.3 and suspending the pension reform, Lecornu is attempting to reconcile public finance recovery with easing a major political crisis. France is not alone in this challenge, as Brussels requires all EU member states to maintain a public deficit under 3% of GDP.

Countries such as Germany or the Netherlands have succeeded in reducing their deficit by combining pension reform with spending control, while Italy and Spain face higher deficits and similar interest rate constraints as France. The European Commission is closely monitoring Paris and may ask France to strengthen measures by 2027 if the budget trajectory does not comply with the Stability and Growth Pact rules.

European comparison: GDP and growth 2025

Here is an overview of projected GDP growth for 2025 in major EU countries:

These figures highlight economic performance gaps within the EU: Central and Eastern European countries show higher growth rates, while France and Germany remain below the European average.

inal infographic: GDP, deficit, and spending by EU country

• Vertical axis: GDP growth (%)
• Horizontal axis: EU countries
• Bars: projected growth
• Color: public deficit (darker red indicates higher deficit)
• Points: total public spending as % of GDP

Eastern European countries show growth above 3%, major Western economies remain below the EU average, and Nordic/Benelux countries present a more stable balance.

Sébastien Lecornu navigates between domestic political pressure and European obligations, with a 2026 budget that balances public finances, support for the middle class, and social stability. The suspension of the pension reform ensures that the legal retirement age and insurance period remain at 170 quarters for several generations, benefiting 3.5 million French citizens.

©2025 – IMPACT EUROPEAN

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