The National Assembly’s 458–0 vote sends the 2027 finance bill to the Senate in its original form. French 10-year yields still fell on Thursday as a global haven bid outweighed the domestic gridlock.
MoneyTurkey Foreign Markets Desk | 5 November 2026, 21:15 UK time
Key points
- On Wednesday night the National Assembly rejected the revenue section of the 2027 finance bill by 458 votes to 0, with two abstentions. Under the Assembly’s rules, that rejects the whole text at first reading.
- The government’s original draft now goes to the Senate, which starts its debate on 20 November.
- OAT yields fell rather than rose on Thursday. Banque de France data put the 10-year at about 4.75%, down from 4.88% on Wednesday, and the OAT–Bund spread narrowed to about 148bp from 156bp.
What happened
MPs spent about 10 days dismantling key parts of Prime Minister Sébastien Lecornu’s draft before voting down the revenue section, RFI reported. Because that first part failed, the spending provisions were never debated. Politico reported that the result was widely expected because Lecornu lacks a majority in the lower house.
Public Accounts Minister David Amiel warned that the amended version would have pushed the deficit to 5.9% of GDP. The government is targeting 5% for 2027, with savings of about €43 billion (~$49 billion), according to RFI and Politico. Lecornu’s office said that “the time for compromise will come after the Senate’s reading”, with talks set to resume in December.
The bond tape
The vote did not push French yields higher on Thursday. Euro-area yields fell after the Democrats’ midterm sweep in the US, Agefi-Dow Jones reported via ABC Bourse. At about 11:35 Paris time, the 10-year OAT was 8bp lower at 4.74% and the spread over Bunds had narrowed to 148bp, citing Euronext data.
The French Treasury agency (AFT) sold nearly €12 billion (~$14 billion) of OATs at a Thursday auction. The new 10-year line due 25 November 2036 cleared at a weighted average yield of 4.74%, compared with 4.93% at the previous auction on 1 October, the same report said. The spread is still well below its 22 October peak of 174.6bp, according to Banque de France and Bundesbank data compiled by ideal-investisseur.
Analysts treated the rejection as noise. Eurasia Group’s Mujtaba Rahman told CNBC the vote was “largely meaningless”. ING’s Charlotte de Montpellier called it “not a surprise at all” and said the 5% deficit target would not be reached. ING strategists have said they see a 10-year OAT–Bund spread of about 150bp as a floor while the 2027 presidential race remains uncertain.
Local context
This year’s result mirrors last year’s budget deadlock, RFI noted. On 23 October MPs also rejected the 2027 social security budget by a near-unanimous vote, and the Senate takes that bill up from 9 November, franceinfo reported. Le Figaro and CNBC reported that, without a majority, the government may have to choose between Article 49.3, which exposes it to a no-confidence motion, and budget ordinances. Ordinances have never been used to pass a budget under the Fifth Republic. The vote came a day before nationwide strikes over the cost of living.
What to watch
- The Senate’s reading of the finance bill from 20 November, and of the social security bill from 9 November
- Whether the government uses Article 49.3 or ordinances to pass the budget in December
- Whether the OAT–Bund spread holds near the ~150bp level ING flags as a floor
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Sources
- Assemblée nationale: Scrutin n°9759, first part of the 2027 finance bill
- RFI: MPs unanimously reject 2027 French budget as political deadlock continues
- Politico Europe: French National Assembly unanimously rejects budget bill
- CNBC: Nationwide strikes loom as French budget is unanimously rejected
- franceinfo: L’Assemblée nationale rejette à l’unanimité le budget de l’Etat 2027
- Le Figaro: Budget 2027: quelles sont les prochaines étapes ?
- ABC Bourse (Agefi-Dow Jones): Les taux se replient en zone euro, l’OAT en net recul
- ideal-investisseur (Banque de France / Bundesbank data): 10-year OAT / Bund spread
- ING Think: European bond spreads in a duel with the ‘Bad’
