François Villeroy de Galhau, governor of the Bank of France, issued a strong call for greater clarity surrounding the French government’s plans to repair the country’s public finances, Bloomberg reports.
Speaking at the Investir Day conference in Paris on Tuesday, Villeroy emphasized the need for confidence to ensure stable borrowing costs and economic growth.
He warned that ongoing uncertainty surrounding the government’s budget, currently facing challenges in parliament, is driving up borrowing costs and jeopardizing investor confidence.
The governor highlighted the potential negative consequences of continued uncertainty, stating that it risks delaying investment and hiring decisions by businesses and small firms. This concern is amplified by the fragility of Prime Minister Michel Barnier’s administration, which faces a potential loss of power due to the fragmented parliament.
France’s deficit is projected to reach 6.1% of economic output this year. Villeroy warned that the rising cost of servicing France’s national debt is projected to surpass annual budgets for defense this year and education in 2025. He stressed the importance of reducing the deficit to within 3% of economic output to curb the escalating debt burden.
