France needs swift clarification of its budget strategy following the snap parliamentary election, Bank of France chief and European Central Bank policymaker Francois Villeroy de Galhau stated on Wednesday. This urgency comes after President Emmanuel Macron's party underperformed in the European elections, prompting the call for new parliamentary elections. Villeroy warned that French financial markets have been affected by the uncertainty, with bonds and stocks underperforming compared to other European markets. He stressed the importance of detailing budget cuts to address the rising public deficit, amid pressure from rating agencies and the IMF. Villeroy also noted that France's inflation is expected to drop below 2 per cent early next year and average 1.7 per cent in 2025. The Bank of France has recently revised its growth forecasts for 2025 and 2026 downward due to anticipated government spending cuts, while maintaining a growth forecast of 0.8 per cent for 2024. A recent poll suggested that Marine Le Pen's National Rally (RN) might become the leading party in the lower house, potentially resulting in significant public finance costs based on their past proposals. Attribution: Reuters.
