The Banque de France is Revising its Growth Forecast Upwards and Supporting Measures Targeting the Richest

The Banque de France supports measures targeting the highest assets and is more optimistic about its growth forecast for 2025, revised to 0.7%

or the governor of the Bank of France, the economic situation in France requires the implementation of “anti-tax” measures and optimization on the high earners” during a future budget, in order to balance the efforts weighing on the French population.

Three days after the downgrading of the French debt rating by Fitch, François Villeroy de Galhau insisted this Monday, in an interview with Parisian, on the need to resolve the budgetary problem “aggravated” by the political crisis, in order to reduce the public deficit to 3% of gross domestic product (GDP) in 2029.

“Save the middle classes”

“We can’t wait any longer”, he said, deploring the “political quarrels”. The governor defended “a shared effort” between the State, local authorities and Social Security, three-quarters of which must focus on controlling public spending.

But this effort should not “exclude certain targeted and exceptional tax measures, up to a quarter of the total effort”, he explained. “The truth is that there is never a painless tax, nor a magic tax that would bring in a lot of money in France when it does not apply to our competitors”, he declared, questioned about the so-called “Zucman” tax on very high assets demanded by the socialists from the new Prime Minister Sébastien Lecornu.

For François Villeroy de Galhau, tax measures must spare the middle classes and SMEs, and last until the deficit returns below 3% of GDP. “To cite an example, anti-tax optimization measures on high wealth would be justified” so that the recovery effort is “felt as fair”, he indicated. In this regard, he estimated that the budget framework presented in July by former Prime Minister François Bayrou “can be improved”.

Stronger growth than expected

Concerning growth, it is holding up, although slowed down compared to 2024 (+ 1.1%). The Banque de France raised its forecast for 2025 to 0.7% on Monday, compared to 0.6% previously. Driven in the first half by inventory variations, growth “should be followed by a destocking movement and a clear rebound in exports from the third quarter”, she explained, updating her macroeconomic forecasts.

In 2026 and 2027, growth is expected to accelerate, but less markedly than expected. It is revised down by 0.1 point to 0.9% and 1.1% respectively. Added to national instability, a potential source of wait-and-see attitude among households and businesses, is a more unfavorable international environment: the rise in the price of the euro which penalizes European competitiveness, lower external demand and higher oil prices.

Despite recent political turmoil, the Banque de France estimates that the country is able to reduce its public deficit to 5.4% this year, after 5.8% in 2024.

This is more uncertain for the objective of 4.6% which was displayed by the previous government: consultations around the budget could lead to reducing the budgetary effort of 44 billion euros initially targeted without necessarily additional growth.