France passes delayed 2026 budget, unlocking a major military expansion

Paris has pushed its postponed 2026 spending plan across the finish line, using constitutional authority to bypass a splintered legislature and deliver the financing President Emmanuel Macron promised for a stepped-up defense posture. The budget reorients resources toward the armed forces, delivering an additional multi-billion euro allocation that funds new platforms, missile systems and hundreds of armored vehicles while also undergirding a freshly launched voluntary service program for young recruits. Policymakers have set a narrower deficit aim for the year and plan slight reductions in overall public expenditure as part of a broader effort to reassure European partners and ratings agencies about fiscal discipline. To offset some of the costs, the package includes targeted tax measures largely aimed at corporate profits that are expected to generate sizable additional revenue next year. The maneuver relied on concessions to opposition groups to blunt efforts to bring down the government, producing compromises on contentious domestic reforms in order to secure the bill’s passage. Strategically, Paris is signaling a willingness to prioritize security investments in response to a more volatile international environment, from the war in Ukraine to new tensions in the Middle East and emergent cyber and proliferation risks. Financially, the choices reflect a trade-off: heavier defense spending alongside modest deficit compression and revenue-raising measures, rather than deep across-the-board cuts. Politically, the episode exposes the limits of executive control in a fragmented assembly and the transactional bargains required to keep a minority administration afloat. For defense planners, the guaranteed funds accelerate procurement timetables and expansion of personnel training programs, but they also create pressure on future budgets if the security agenda grows. For markets and credit-watchers, the outcome is a mixed signal — commitment to long-term strategic priorities while maintaining only incremental progress on public-sector imbalances. The passage is likely to shape France’s defense-industrial activity, procurement pipelines and short-term fiscal trajectory, with ripple effects in European defense cooperation and joint procurement programs. Ultimately, the budget is both a tactical victory for the executive and a reminder that sustaining such policy choices will demand continued political management and clear fiscal offsets in the years ahead.