France’s Villeroy Hopes to Keep Fiscal Policy Stable

Posted Thursday, July 9, 2020 by
Skerdian Meta • 1 min read

France already had a high public debt before the coronavirus pandemic and a high yearly deficit, although the EU wasn’t too aggressive towards Macron like it was towards Mateo Salvini in the case of Italy last year.  Now, French Finance Minister Villeroy is saying that the public debt should be kept at 120%, which is still massive. But I don’t think they will be able to keep the deficit stable, with the global recovery not looking as strong as initially hoped. Although Villeroy was sounding quite optimistic a few days ago. Below are Vileroy’s comments:

Villeroy in A Letter to French President Macron

  • ECB ready to be innovative with policy tools if needed
  • France should avoid raising or cutting taxes
  • France needs stable fiscal policy over several years
  • It would be wise to keep public debt capped at 120% of GDP
  • Otherwise, investor confidence will fall
  • That would risk France slipping more towards Southern Europe
Villeroy sort of overstepping the bounds as he is now offering the government fiscal advice but then again, this is the time where both fiscal and monetary policies need to work hand in hand more than ever.
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