2024-10-09 08:09:00
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“For the effort to be fair, to be effective, it must be shared” between the different actors, argued François Villeroy de Galhau this Wednesday morning.
It is a frank message sent to political decision-makers. On the eve of the presentation of a particularly anticipated finance bill, the governor of the Bank of France called on everyone to be reasonable and to accept shared efforts, so that France can finally regain control of its public accounts. . An urgent situation, while the country is “in the situation of a family living beyond its means” for too long.
“It was absolutely necessary to reverse the trend which is weakening France”in which ever more deficit leads to ever more debt and interest to pay. “The draft budget is going in the right direction”by reducing spending by some forty billion euros, noted François Villeroy de Galhau. The step forward will be difficult, but necessary: “France has the same social model and public services as our neighbors, but it costs us much more, 260 billion euros more than our neighbors. There is therefore an efficiency gap that must be addressed”noted the governor.
Solidarity between stakeholders – State, local authorities, businesses – will be the key word to meet this colossal challenge, he then warned. “Everyone has a tendency to get savings ideas from others and refuse them at home. Everyone needs to stop playing havoc with all the savings options on the table.”otherwise the country will “zero economy” and the debt will continue its crazy spiral. “For the effort to be fair, to be effective, it must be shared” between the stakeholders, judged François Villeroy de Galhau. “It’s not easy, but it’s necessary and possible. […] It is time that we collectively pull ourselves together. We are no dumber than our European neighbors”who succeeded, insisted the governor of the Bank of France.
Towards a rate cut next year
The representative also expected a further reduction in interest rates next week. “Very likely”this decision will be taken by the Governing Council and should “help the economy”for example by limiting the cost of real estate loans. It will not be the last, added François Villeroy de Galhau, stressing that the next reductions will depend “from the continuation of the fight against inflation”. On this point, “the victory […] is in sight”welcomed the senior official, for whom the rate should go back “sustainably” below 2% in France, from next year. The Banque de France is also not changing its growth forecast, kept at 1.1% for this year. “It is also consistent with the forecast underlying the budget for next year”noted the governor.
François Villeroy de Galhau’s speech comes at a time when local authorities have vehemently rejected the government’s spending plans. “The main lines presented are heavy. This is an unprecedented drain in a single year. We do not accept any of the proposed measures”protested the mayor (PS) of Issoudun, deputy vice-president of the Association of Mayors of France (AMF), on Tuesday. The standoff has only just begun.
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