The Governor of the Bank of France François Villeroy de Galhau recalls that French businesses and households “wait for clarity, confidence, on how we are going to reduce our deficits and control our debt.”
The governor of the Bank of France, François Villeroy de Galhau, warned on Tuesday of the risks that could arise from “confusion” around the way in which France was going to “reduce (its) deficits and control” its debt”, which “would have a cost on loans from France and the French.” “Investors who lend to France, and the French themselves – whether entrepreneurs or households – expect clarity, confidence, on how we are going to reduce our deficits and control our debt,” he said during the Investing Day conference.
“The more there is uncertainty rather than confidence, the more businesses and SMEs risk postponing their investments and hiring,” he added.
A change in budgetary trajectory in the “national interest”
In search of 60 billion euros in savings to restore flagging public finances and reduce the deficit to 5% of GDP in 2025, the government presented its draft budget for 2025 to the Senate on Monday. But many uncertainties remain over the outcome of this text: the National Rally does not hide its intention to vote on one of the motions of censure which will be tabled by the left if the three texts remain “as is” according to Marine Le Pen. With the deputies of the New Popular Front, the majority would be reached and the government of Michel Barnier overthrown.
Government spokesperson Maud Bregeon said on Saturday that she feared, in the event of censorship, a financial crisis and “a Greek scenario”, in which civil servants would not be paid in January. “France must change its budgetary trajectory,” François Villeroy de Galhau declared on Tuesday. “Not only because of compliance with European excessive deficit rules, but also and above all in our national interest.”
“Returning to 3%” deficit in 2029, “as the government is proposing, is essential. Otherwise, we will remain this exception in Europe: the country whose public debt continues to increase after Covid while all the others have declined,” he added.
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