France faces economic “suffocation” as debt crisis deepens, warns central bank chief

 France is facing a significant economic crisis, characterized by a high deficit and increasing debt. Bank of France Governor François Villeroy de Galhau warns that without urgent reforms, the country risks long-term damage to its economy.

1. Current Economic Situation:

• France's deficit is 5.4% of its GDP, and its public debt stands at €3.3 trillion (115% of GDP).

• Interest payments on this debt are projected to triple to €100 billion by 2030, which could lead to long-term stagnation.

2. Credit Rating Downgrades:

• Credit agencies, including Moody's, Fitch, and S&P, have downgraded France's credit outlook and rating, indicating a lack of confidence in its financial management.

3. Need for Fiscal Reform:

• Villeroy de Galhau calls for France to reduce its deficit to 3% of GDP by 2029 through spending cuts, rather than tax increases, to avoid burdening future generations with debt.

• He emphasizes that excessive taxation could further stifle economic growth and warns against inflicting pain on the middle class and entrepreneurs.

4. Consequences of Political Gridlock:

• Ongoing political infighting has hindered necessary reforms to manage the economic situation, leading to delays in budget approvals and other critical measures.

• Villeroy de Galhau expresses concern that France has been perceived as a burden rather than a driver of European economic growth.

5. Impact on Households and Businesses:

• Rising borrowing costs are affecting both household budgets and business operations, with funds being diverted from essential sectors like defense and green energy.

France's economy is at a crucial turning point, with the potential for profound negative consequences if immediate fiscal reforms are not enacted. As political conflicts continue, the challenge remains for leaders to find a way to stabilize the nation's economy and reduce its debt burden, or risk becoming a cautionary tale in Europe for economic mismanagement. The future depends on whether political factions can unite to tackle this pressing issue effectively.

https://www.naturalnews.com/2025-10-28-france-faces-economic-suffocation-debt-crisis-deepens.html