Finance Law of 19 February 2026 (2026 Budget Act)

France's 2026 Budget Act, enacted on 19 February 2026, is a sweeping fiscal consolidation law aimed at reducing the public deficit from approximately 6% of GDP in 2025 to 5% of GDP in 2026. To achieve this target, the government has combined significant spending cuts across state ministries with new and extended revenue measures targeting high-net-worth individuals and certain corporate structures. On the revenue side, the law introduces a new tax on patrimonial holding companies — structures commonly used by wealthy families to hold and transmit assets — and extends exceptional income and wealth levies on the highest earners and largest fortunes that were originally introduced as temporary measures. These provisions are designed to ensure that fiscal consolidation is not borne solely by public services. On the expenditure side, the law mandates across-the-board reductions in state spending, with ministries required to operate with tighter budgets. The cuts affect public investment, operating budgets, and certain social transfers, though essential services such as defence and education are partially shielded. Overall, the law represents one of the most significant fiscal tightening efforts in recent French budgetary history, reflecting pressure from European Union deficit rules and bond market expectations following several years of elevated post-pandemic spending.

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