PARIS, “Reuters”: The French government has announced that France should clarify the country’s budget strategy as soon as possible after the parliamentary elections.
ECB advisor Francois Villeroy de Galhau said this.
French stocks and shares in other European markets were lower this week after President Emmanuel Macron called snap national elections. Macron’s surprise move followed the defeat of his far-right party in last weekend’s European elections.
Macron’s government has come under pressure from rating agencies, the International Monetary Fund and the National Fiscal Organization to provide details on budget cuts planned for this year and next to reduce a huge public deficit. These spending cuts are now in doubt.
“I think it’s important that regardless of the outcome of this vote, France quickly clarifies its economic strategy and in particular its budget strategy,” he told Radio Classique.
“In our forecast, we said that from the beginning of next year, inflation in France should fall below 2% and could even average 1.7% in 2025,” Villeroy added.
Earlier in the week, the Bank of France cut its growth forecast for 2025 and 2026 due to government tightening, while keeping its forecast for this year at 0.8%.
“The Bank of France does not have the right to comment or manipulate policy (…) before the liquidation announcement, we were already saying that there were high risks to our assessments,” Villeroy said.
A poll this week predicted Marine Le Pen’s National Assembly (RN) would be the dominant party in parliament.
Although the parties have not yet presented their plans for the legislative elections, the RN’s plan is likely to be very expensive for public finances, judging by the proposals for the last parliamentary elections in 2022.
(Translated by Laura Contemori; Editing by Stefano Bernabei)
