PARIS (Reuters) – France’s central bank head on Tuesday put pressure on the country’s deeply divided political class to tackle its strained public finances, saying the issue cut across party lines.
The collapse of Prime Minister Michel Barnier’s government last week left France’s 2025 budget in limbo with ministers scrambling to prepare stop gap legislation to roll over 2024 spending limits until a new budget bill can be drafted next year.
Opposition lawmakers from the left and far-right united to vote down Barnier’s government last week in a no-confidence motion after he tried to bypass parliament to pass part of his 2025 budget.
“Regardless of the political situation, France needs to put its public finances in order. This is in our national interest, which transcends partisan interests,” Bank of France Governor Francois Villeroy de Galhau said in speech.
The demise of Barnier’s government has thrown into question France’s deficit reduction plans. His failed budget had planned to cut the fiscal shortfall to 5% of economic output next year from an estimated 6.1% this year.
In a broad diagnosis of what ails France’s finances, Villeroy urged policymakers to look at how other countries manage with less spending and to learn to stick with targets over time.
With a poor track record of meeting its deficit reduction targets, France has one of the highest levels of public spending in the world relative to the size of its economy and yet surveys regularly flag growing frustration with public services.
(Reporting by Leigh Thomas; Editing by Christina Fincher)
