New Prime Minister: “Enough of this Political Mess”… The Boss of the Banque de France Rants

COMPROMISE IS NOT A BAD WORD: François Villeroy de Galhau comes out of his usual reserve to declare that he has “enough of (the) political mess” and calls on the parties to make “compromises” and “coalitions” to escape instability

It is rare enough for a governor of the Bank of France sort of his reserve not to mention it… François Villeroy de Galhau explains this Friday that he has “enough of (the) political mess” in France. He calls on political parties to make “compromises” to get the country out of the instability that has shaken it since then dissolution of the National Assembly.

“I am like all French people, I love our country and I am really fed up with this political mess”, he declared on RTL. “It’s time to compromise – that’s not an insulting word – and form coalitions”, he added.

From “Europe locomotive” to “tail car”

Concerning the budget for 2026, which must be presented no later than Monday to be able to be adopted by December 31, François Villeroy de Galhau estimates that three-quarters of the effort to reduce the public deficit should focus on controlling public spending. “Tax measures can act as a complement”, with “temporary measures […] in the direction of tax justice”, he believes. These measures must spare the middle classes and entrepreneurs, according to him.

After a public deficit expected at 5.4% of gross domestic product (GDP) in 2025, François Villeroy de Galhau considers it necessary to reduce it “by at least 0.6” points next year in order to reach the maximum of 3% authorized by Brussels, essential to stabilize the level of public debt. “All of Europe is watching us today and the investors, who otherwise can sanction us on the markets”, he warned. France, traditionally, is the locomotive of Europe. Today, it’s the caboose”.

For 2025, the Banque de France anticipates growth of 0.7% in GDP. But its governor estimated that national political uncertainty “costs us at least 0.2 points of growth”. If households regained confidence and lowered their savings rate by 1 percentage point, currently at a record level (excluding the health crisis) of more than 18% of their gross disposable income, “this would bring us 0.4 points of additional growth “, he added. Adding international geopolitical and trade tensions, the context of uncertainty costs a total of “0.4 or 0.5” points of growth. 0.1 point represents around 3 billion euros, he specifies.

François Villeroy de Galhau did not answer the question of whether he had been approached to participate in a possible government, stressing that his “mission” was at the Banque de France.