Banque de France Governor Urges Urgent Action on Deficit Following Credit Rating Downgrade

In a stark warning, Governor of the Banque de France, François Villeroy de Galhau, has emphasized the pressing need to address France's budget deficit, following the country's recent credit rating downgrade by Moody's. In a speech delivered on September 15, 2025, Villeroy de Galhau stated, "We must finally take our deficit problems seriously. Failure to do so will undermine investor confidence and could have long-term repercussions for our economy." The downgrade reflects a broader concern over fiscal policies following persistent deficits that the government has struggled to curtail.

According to recent government figures, France's public deficit stands at approximately 5.4% of GDP, significantly above the eurozone's stability threshold of 3%. Villeroy highlighted that the continuing deficit not only threatens future economic growth but also complicates the government's ability to respond to potential crises. He indicated that prompt measures must be enacted not just to stabilize the current situation but also to lay the groundwork for sustainable public finances in the long run.

Historically, the trend of increasing expenditure without corresponding revenue growth has led to repeated warnings from economists and financial institutions. In light of Villeroy's remarks, discussions are expected among policymakers regarding potential reforms to taxation and public spending.

"It is crucial that we act now rather than waiting for further downgrades or economic deterioration," Villeroy stated, urging the government to implement transparent and effective fiscal strategies.

The pressure is mounting on Minister of Economy Bruno Le Maire, who is currently drafting plans to address this fiscal imbalance, with proposals expected to be discussed in the upcoming budget meetings. The economic outlook remains precarious, and as Villeroy warns, the time for significant reforms is now, to restore faith in France's economic management and protect the nation's fiscal integrity.