Its director François Villeroy de Galhau points out two pieces of good news: “disinflation” and the “success of the Olympic Games”.
The Bank of France is preparing to raise “A little” his growth forecast for France in mid-September, announced in an interview with the magazine The Point the governor of the monetary institution, François Villeroy de Galhau. The latter highlights “two pieces of good economic news” to justify this decision, on the one hand “disinflation, which will allow gains in purchasing power and a drop in interest rates”as well as “the success of the Olympic Games”In June, in its latest forecasts, the Banque de France was counting on growth of 0.8% in 2024.
François Villeroy de Galhau describes the French economy as being in “resilience”: “It has avoided recession, but it is not yet recovery”. Despite this increase in the growth forecast for 2024, “Activity is threatened by two confidence shocks”warns the governor, who points out “interest rate gap” between France and Germany as well as “uncertainty” that entrepreneurs face: “They risk postponing their investment and hiring plans”says François Villeroy de Galhau.
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A “budget meeting” not to be missed
In the vagueness of the political context of a France still without a government, the governor of the Bank of France recalls the character “key” of “budget meeting”while the draft state budget must be voted on by Parliament and published no later than December 31. “To be respected and listened to in Europe, France must fulfil its European commitments”underlines François Villeroy de Galhau.
In a letter sent Monday evening to the general rapporteurs and the chairmen of the Finance Committees of the two assemblies, the Ministry of the Economy alerted Parliament to the public deficit: the unexpected surge in local authority spending, coupled with disappointing tax revenues, could push the public deficit to 5.6% of GDP this year, or even 6.2% in 2025.
In The PointFrançois Villeroy de Galhau once again recalled the need to bring this deficit below the 3% of GDP mark. “Not necessarily as early as 2027, however: a realistic compromise on the timetable will be needed, compatible with the new European Pact”he said, while recalling the independence of the Bank of France which “does not have to make partisan comments”.
