PARIS, Jan 14 (Reuters) – France will enter the danger zone if the country’s budget deficit were to be higher than 5% in 2026, ECB policymaker and Bank of France Governor Francois Villeroy de Galhau said on Wednesday.
“I must say with some seriousness that with a deficit of more than 5%, France would be in the red zone, in the danger zone as far as international lenders are concerned,” Villeroy said on BFMTV.
He added that, while political uncertainty surrounding the budget costs at least 0.2 percentage points of growth, France’s economy, the euro zone’s second largest, was showing some resilience.
“Over the whole of 2025, (France’s) growth is expected to be at 0.9%,” Villeroy said, pointing out to the Bank of France latest business sentiment survey.
Lawmakers failed to pass a 2026 budget by the end of last year, requiring emergency stop-gap legislation to be passed. They resumed their review of the 2026 budget on Tuesday, but many say that the government will need to bypass parliament with special constitutional powers to get it passed.
(Reporting by Benoit Van Overstraeten;Editing by Louise Rasmussen and Sudip Kar-Gupta)
