A Stark Warning on Deficits and Dependence
The Governor of the Bank of France, François Villeroy de Galhau, has issued a forceful call for Europe to assert greater control over its economic future. In an interview, he warned that the continent must reduce its dependency on the United States and China to compete globally.
French Deficit Target “A Minimum”
Villeroy de Galhau expressed clear dissatisfaction with France’s fiscal trajectory. He emphasized that the government must respect its target of keeping the public deficit at 5% of GDP for 2026, a figure he described as a minimum. “I would have liked a stronger reduction,” he stated, reiterating his previous position that exceeding 5% would put the country “in danger.”
Beyond Trump: A Call for European Muscle
Commenting on the recent withdrawal of US tariff threats against France, the Governor said it was “all the better when certain unacceptable threats are removed.” However, he argued this should not lead to complacency.
“Europe must take more control of its economic destiny,” he asserted. The central banker urged the continent to focus less on figures like Donald Trump and instead “roll up its sleeves” to leverage its own strengths. His message was clear: Europe must “act faster, clearer, stronger” and “build muscle” to defend its interests.
Mercosur Treaty and the Agricultural Crisis
On the contentious EU-Mercosur free trade agreement, Villeroy de Galhau acknowledged a crisis in some agricultural sectors but defended the pact. “The treaty is not responsible for this crisis, and not signing it would not be a remedy,” he said, noting potential benefits for French industry and dairy farmers.
He framed the agreement as a strategic necessity, arguing that “in the face of American and Chinese pressure, it is in Europe’s interest to forge other alliances.”
Advice for French Savers
Finally, addressing the high savings rate of French households, the Governor suggested directing more capital toward long-term investments. He advocated for retirement savings plans and equity investments in companies.
“Over the long term, they yield more than the Livret A or euro-denominated life insurance,” he concluded, encouraging a shift in savings behavior to support economic growth.
