PARIS (Reuters) – The governor of the Bank of France, François Villeroy de Galhau, deemed it “imperative” on Thursday to stabilize France’s spending in volume terms in order to compensate for the “deterioration” of public accounts.

“It is high time, not to decree austerity and a general reduction in spending, but to achieve their overall stabilization in volume,” declared the governor of the Bank of France during a speech at the Paris-Dauphine University.

“This requires an effort of prioritization and efficiency, fair and shared by all: State, but also local authorities and social benefits,” he added.

“Once over the ‘hump’ of exceptional Covid and energy support, our total public spending has further increased as a percentage of GDP compared to 2019. In volume, excluding the effect of this exceptional spending, it could still increase by more than 2% in 2024,” lamented François Villeroy de Galhau.

France’s public deficit reached 5.5% of gross domestic product last year according to INSEE, a proportion much higher than the government’s projections, which nonetheless confirmed its desire to reach less than 3 % by 2027.

François Villeroy de Galhau estimated that these “tensions on public finances” did not mean “of course the bankruptcy of France” but required, in addition to the stabilization of spending, to “now demonstrate credibility”.

“For fifteen years our country and its successive governments have not kept their multi-year recovery commitments,” regretted the governor of the Bank of France and member of the Governing Council of the European Central Bank (ECB).

(Written by Jean-Stéphane Brosse, edited by Sophie Louet)

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