Finance Minister Eric Lombard said on Thursday he saw no risk of a financial crisis in France, aiming to reassure investors as the government faces a likely confidence vote defeat next month.
French bonds and stocks took a beating on markets earlier this week as Prime Minister Francois Bayrou surprised everyone on Monday by announcing the confidence vote over his plans for sweeping budget cuts.
Bayrou will focus the vote on the need to put the country’s finances back on track as he tries to get approval for his budget plans.
Lombard himself talked earlier this week of a potential risk of needing the International Monetary Fund to step in if France did not put its finances in order.
However, Lombard adopted a more reassuring tone on Thursday.
French Economy Remains Stable
“I don’t believe in a financial crisis,” he told a gathering of France’s MEDEF business lobby group. “The country is rich, the country is growing, the country is managed, it is under control, and France’s businesses are doing their job,” he said.
“We have no difficulty financing our economy,” he added, adding that the public deficit would be cut to 5.4% of gross domestic product by the end of the year, as planned.
Opposition parties have said they will bring down the minority government in the September 8 confidence vote.
Business leaders told the same conference on Wednesday that the political crisis carried heavy risks for the economy.
Opinion polls conducted after Bayrou’s announcement show most French people now want new parliamentary and presidential elections, pointing to deepening dissatisfaction with politics and a risk of lasting uncertainty.
According to the opinion polls released on Wednesday, two-thirds of people surveyed in two of the three polls also wanted President Emmanuel Macron to resign, and the far-right National Rally (RN) got the most backing to lead the next government in one poll, although not a majority.
The polling points to a deepening of the uncertainty and dissatisfaction with politics in a country that has had only minority cabinets and fragmented parliaments since Macron’s re-election in 2022.
(With inputs from Reuters)
