The war in the Middle East will significantly widen the Social Security deficit in 2026, according to the Court of Auditors

The conflict between Iran, Israel and the United States continues to have repercussions on the French economy. According to the Court of Auditors, which publishes its report on Wednesday May 27 on the application of the 2026 Social Security financing laws, the war underway since February 28 in the Middle East will have a heavy weight on the Social Security accounts.. In the event that the effects of the crisis remain “temporary and limited”the Court of Auditors estimates the deterioration of the Social Security deficit at “3 milliards” in 2026 et “à 5 milliards” in 2027.

These results can be explained by the lower dynamism of the payroll, which means lower social security contribution income than what was estimated in the Social Security Financing Law (LFSS) for the year 2026. The inflation supplement also has consequences on the revaluation of social benefits in 2026 and this should be felt to the tune of 1.7 billion euros in 2027.

This figure could, however, vary: to carry out its calculation, the Court of Auditors, which completed its report several days ago, takes into account the cost of the increase in reductions in business charges due to the increase in the minimum wage, in the context of inflation. However, the Minister of Public Accounts, David Amiel, announced on Friday that reductions in social security contributions for companies on low salaries would be frozen, despite the increase in the minimum wage on June 1.

In this geopolitical context, the government has already announced that 2 billion savings will be made “in the social sphere” during the meeting of the public finance alert committee at the end of April, without further details, the arbitrations being referred to the next committee on June 26. “These recovery measures, provided they are implemented quickly, should make it possible to limit the slippage in execution in 2026. However, they will be insufficient, on their own, to counteract the effects of the shock in 2027”analyzes the independent authority.

In its report, which should make it possible to inform Parliament and prepare the 2027 Social Security financing law, the Court of Auditors also highlights underestimates in expenditure and overestimates in revenue which worsen the Social Security deficit by 1.2 billion euros in 2026. And this, “even before any revision of the economic hypotheses”. The cost of creating additional birth leave was, for example, not included in the family branch’s spending objective, explains the Court of Auditors.

“Social Security no longer has the room to maneuver to absorb economic shocks.”

The Court of Auditors

in his report of May 27, 2026

The institution thus alerts on “significant execution risks” of the 2026 financing law, in other words on an inability to respect the objectives of the text, which initially provided for a deficit of the basic compulsory Social Security schemes of 19.4 billion, a drop of 2.2 billion compared to 2025.

Without public intervention, the trend would have brought the deficit to 28.7 billion. “The rebalancing is mainly linked to new revenue (2.7 billion) and transfers from the State (4 billion). Savings in spending are limited (2.6 billion)”analyzes the Court of Auditors.

Added to this are measures taken in 2026 to limit the increase in social debt, including the recovery of exceptional debt of 15 billion from the Social Debt Amortization Fund (Cades) and an advancement of the payment of conventional rebates from pharmaceutical laboratories by 9 billion.

Even before suffering the effects of the crisis in the Middle East, and “constant policy”, social deficits were expected to remain above 20 billion per year from 2027, according to the trajectory of the Social Security financing law of 2026. “With the aging of the population, the sustainability of the system is at risk in the medium term”thus develops the Court of Auditors.

She therefore considers it essential “to initiate, now, an action plan aimed at bringing the Social Security balance back to balance in 2030”. To achieve this, it calls for an additional effort of 6 billion per year, in addition to the 4 billion per year already planned by 2029, and mentions various recommendations to achieve this.

Another lesson from this report: the deficit in the basic compulsory social security schemes and the old age solidarity fund has doubled in two years. It reaches 21.6 billion in 2025, the highest level since 2012, excluding the Covid-19 crisis.

This deficit is, however, lower than the estimates of the Court of Auditors communicated in November: it was then working on a deficit of 23 billion euros for 2025. It is also lower than the amount then voted for in the law on the financing of Social Security, which provided for a deficit of 22.1 billion euros.

In detail, three branches are in deficit: the sickness branch (-15.9 billion), the old-age branch (-7.1 billion) and to a lesser extent the work accidents and occupational diseases branch (-0.2 billion). “This result was achieved thanks to efforts to control health insurance expenditure in execution”estimates the institution.