PARIS (Realist English). French Prime Minister Sébastien Lecornu has announced a suspension of President Emmanuel Macron’s contentious pension reform, in a bid to rally lawmakers behind the government’s 2026 budget and avert the collapse of his administration.
In a dramatic policy reversal, Lecornu said on Tuesday that the plan to raise the retirement age from 62 to 64 — the centerpiece of Macron’s 2023 reform — would be put on hold until 2027, the year of France’s next presidential election. The move, he said, was aimed at securing parliamentary backing to keep the budget deficit below 5% of GDP.
“Is the government ready for a new debate on pensions reform? The answer is yes,” Lecornu told lawmakers during his first address to parliament since being reappointed last week. He also pledged new taxes on large corporations and a more transparent legislative process, promising not to bypass parliament using the controversial Article 49.3.
Lecornu, who resigned last week amid escalating political turmoil only to be reinstated days later by Macron, faces a divided National Assembly and two no-confidence votes scheduled for Thursday. His concession to the Socialist Party, whose votes he needs to survive, is expected to cost €400 million in 2026 and €1.8 billion in 2027, but has bought him short-term breathing space.
French bonds rallied following the announcement, with 10-year yields falling to 3.39%, their lowest level in two months.
“This victory is a first step that enables us to envisage the next: blocking and repeal,” said Boris Vallaud, a leading Socialist MP, while calling for higher taxes on major corporations.
To further balance the books, Lecornu unveiled a €30 billion fiscal plan combining spending cuts and selective tax increases. The government aims to raise €6.5 billion from big businesses and high earners, including:
- A €1 billion levy on around 10,000 holding companies;
- €1.5 billion in additional taxes on the top 20,000 income earners;
- A temporary extension of higher corporate taxes on firms with over €1 billion in revenue, expected to generate €4 billion.
“There will be tax cuts for small and medium enterprises and targeted rises for very large corporations,” Lecornu said, framing the plan as a fair redistribution of fiscal effort.
Still, the decision to suspend pension reform angered conservatives. Bruno Retailleau, leader of Les Républicains, called it “an incomprehensible decision,” accusing the government of making “the French people pay a considerable price to survive a no-confidence vote.”
Political analysts say Lecornu’s tactical concessions may allow him to pass the 2026 budget and temporarily stabilize Macron’s embattled government, but they also underscore how fragile France’s political balance has become.
“We aren’t at the stage where French political risk can be entirely priced out,” said Francesco Pesole, FX strategist at ING. “But it now appears more likely that Lecornu will manage to push a budget through parliament.”
