French Minister in charge of European Affairs: January resumption is crucial, confident in breaking the deadlock on the 2026 budget case.

French Minister Benjamin Haddad, who oversees European affairs, stated that he is confident that the 2026 budget will be successfully passed when the January parliament resumes for a new round of negotiations. In a joint interview with Guy Johnson and Anna Edwards, Haddad made it clear: "We expect to reach a compromise that everyone can accept on budget-related matters in early 2026." The French government plans to hold a meeting on Monday evening where an interim law will be proposed to extend the current tax policies and critical expenditure arrangements for another year. On Tuesday, lawmakers will discuss this proposal, and it is expected to be successfully passed based on the current situation. It is worth noting that last week, the parliament failed to reach a consensus on the 2026 budget during negotiations. Haddad said, "France will not face a government shutdown. When parties cannot agree on the budget, we have a special law as a safeguard that allows the previous year's budget to be extended. This week, we will take action in accordance with this law." It is understood that a committee in the French parliament failed to reach an agreement on the 2026 budget, leading to a delay in discussions on the complete financial plan until the new year, increasing concerns about how the French government will control the deficit. On the morning of December 19th, a committee composed of seven National Assembly members and seven senators quickly abandoned efforts to coordinate the budget draft because serious disagreements persisted between the two houses and different political groups. French Prime Minister Sebastien Lecornu expressed regret that some lawmakers lacked the willingness to reach an agreement. He posted on social media, "Parliament will not be able to pass a budget for France by the end of this year. I regret this deeply, and our fellow citizens should not have to bear the consequences." Nevertheless, France will not face the risk of a government shutdown like that in the United States, as it can maintain critical expenditures and taxes through emergency legislation. The French government warned earlier this week that the approved fiscal law will only reduce the fiscal deficit to 5.3% of GDP in 2026, lower than the 5.4% this year. Initially, Lecornu's goal was to reduce the deficit to 4.7%, but later he said it should be kept below 5%. However, French Central Bank Governor Francois Villeroy de Galhau warned that if the plan to restore public finances does not reduce next year's deficit to below 5% of GDP, France may face negative market reactions. Last Friday, the spread of French ten-year government bonds over equivalent German bonds was about 71 basis points, having previously reached over 89 basis points in October.