France’s Central Bank chief warns of economic ‘suffocation’

France is at risk of gradual economic “suffocation” unless it addresses its budget and debt problems, the governor of the Bank of France has warned.

In an interview with La Croix on Saturday, Francois Villeroy de Galhau acknowledged that France is facing a “serious budgetary problem,” as the government deficit remains high at 5.4% of GDP in 2025, only slightly improved from 5.8% last year. He said France must bring the shortfall down to 3% by 2029 to restore fiscal credibility.

“Our country is not threatened with bankruptcy, but with gradual suffocation,” Villeroy de Galhau said, pointing to debt-servicing costs projected to rise from €30 billion in 2020 to more than €100 billion by the end of the decade. He warned that higher interest rates are already pushing up borrowing costs for households and businesses while diverting funds from priorities such as defense and the green transition.