PARIS — The French Senate laid the groundwork for a dramatic, consequential week of fiscal planning for 2026 on Monday by passing its own version of next year’s state budget rife with spending cuts.  

The Senate and France’s more powerful lower house, the National Assembly, must now find a compromise in a process akin to a U.S.-style conference committee set to take place Friday. If that process fails it will considerably diminish the chances of France getting a new budget wrapped by the end of the year. One National Assembly official told POLITICO the meeting will be “make or break.”

Political paralysis also prevented France from getting its 2025 state budget passed before the end of last year; Prime Minister Sébastien Lecornu warned in November that a repeat failure was a “danger that weighs on the French economy.”

The country is highly unlikely to face a government shutdown similar to what happened in the United States earlier this year, however, as lawmakers can approve a measure carrying the 2025 budget over into next year. But such a stopgap would exacerbate the worrying financial outlook in the European Union’s second-largest economy.  

Lecornu managed to secure a consensus on next year’s social security budget, but the state budget is proving more difficult. The National Assembly’s first attempt ended with all but one MP voting against a bill saddled with untenable and sometimes conflicting amendments.

The opposition Socialist Party, which backed the social security bill and is in somewhat of a kingmaker position, is leaning toward voting against this version of the state budget because its members feel France’s wealthiest households won’t be subject to sufficient tax hikes, party leader Olivier Faure said last week.