The governor of the Bank of France said on Friday, October 10, that he was “enough with the political mess” in France and asked political parties to make “commitments” to get the country out of the instability that has shaken it since the dissolution.
“There are budgetary solutions,” he added, specifying that, according to him, the effort should focus “first on expenses (…) to stabilize them,” and that taxes could be planned “as a complement, but specific and exceptional.” “We must not touch the middle classes or businessmen,” continued the governor of France.
While the debate turns in particular on the scope of the effort to be made, François Villeroy de Galhau asks not to plan a deficit target higher than 4.8% of GDP in 2026. “We start from 5.4% this year, the objective is to reach 3% in 2029 (…). Therefore, in the first year we must reduce this deficit by at least 0.6 points, and not exceed 4.8% next year.” he explained.
Sébastien Lecornu mentioned on Wednesday a public deficit target “below 5%” of GDP in 2026, compared to 4.7% two weeks ago.
Instability costs 0.2 growth points
While rumors send him to Matignon, François Villeroy de Galhau assured that he intends to remain in his position.
The Banque de France confirmed its forecast for 0.3% growth of the gross domestic product (GDP) in the third quarter in a monthly survey that reflects a climate of uncertainty, although carried out before the resignation of Sébastien Lecornu. “It’s not brilliant (…) but the businessmen stay their course and the French are working,” the governor was responsible for clarifying.
The latter estimates that national uncertainty, linked to the political crisis, costs 0.2 growth points. On the contrary, if households regained confidence and the savings rate fell one point, “this would give us 0.4 points of additional growth,” said François Villeroy de Galhau.
Source: BFM TV
