France's Economic Challenge: Achieving a 3% Deficit in Five Years

Bank of France head Francois Villeroy de Galhau stated that reducing France's deficit to 3% of GDP in three years is unrealistic, suggesting a five-year timeline instead. With a 2024 budget deficit expected at 5.1%, the government faces tough decisions, including potential tax hikes and spending cuts.

Bank of France head Francois Villeroy de Galhau indicated that lowering France's deficit to 3% of GDP within three years is unrealistic but achievable within a five-year timeframe.

'Three years is not realistic, not economically or with regards to growth. But to do it in five years is possible,' said Villeroy, also a European Central Bank policymaker, on France 2 TV. Earlier, Finance Minister Antoine Armand highlighted that the country’s budget deficit is historically high, with a 2024 projection of 5.1% of GDP, surpassing the EU's 3% limit.

Prime Minister Michel Barnier is considering tax increases on the wealthy and corporations to manage the deficit. Spending cuts are also anticipated, measures that Villeroy supports. Navigating the 2025 budget through a divided parliament will be an early challenge for the new government.

(With inputs from agencies.)