French senators approved the 2026 budget bill on Monday, setting the stage for high-stakes negotiations between both houses of parliament at the end of the week.

The conservative-dominated Senate voted in favour by 187 compared to 109 who voted against after reworking the bill, which the deeply divided lower house failed to pass last month after rejecting its tax provisions.

Following the Senate vote, an indicator of the level of political support for the budget, it will be up to a joint committee of seven lawmakers from both houses to meet on Friday to hammer out a new version of the bill for a vote in the lower house due on December 23. That vote could give the budget final approval.

Should lawmakers fail to agree on a new version, the government will likely submit emergency stopgap legislation to ensure it can keep spending, collecting taxes and borrowing on a temporary basis in the new year until a proper budget can be passed.

Prime Minister Sebastien Lecornu's government wants to limit the public sector budget deficit to less than 5% of economic output next year, down from an estimated 5.4% this year - the biggest in the euro zone.

However, his minority government has little room to manoeuvre in France's fractious parliament, where budget battles have already toppled three governments since President Emmanuel Macron lost his majority in a 2024 snap election.

Last week the house narrowly passed the social security budget, which included provisions to suspend a deeply unpopular 2023 pension reform in a key concession to Socialist lawmakers, whose backing Lecornu needs to pass legislation. A final, formal vote is due on Tuesday.

Amendments in the Senate and suspension of the pension reform have left the deficit 5.3%, which means the joint committee of lawmakers faces tough talks to find budget savings to trim the fiscal shortfall.