At a major business gathering in Paris on Thursday, Finance Minister Eric Lombard sought to calm nerves, saying France faces no risk of a financial crisis—despite growing political instability
and jittery markets.
His remarks come after Prime Minister François Bayrou stunned the political class earlier this week by calling for a confidence vote on his sweeping budget cut plans. The move rattled investors, sending French stocks and bonds lower, and fueling concerns about the country’s fiscal health.
Lombard, who just days earlier warned that France might risk turning to the IMF if it failed to fix its finances, struck a much more reassuring tone this time.
“I don’t believe in a financial crisis,” he told members of MEDEF, France’s leading business lobby. “The country is wealthy, it is growing, it is well managed, and our companies are delivering. Financing our economy is not a problem.”
He reaffirmed that the government still intends to reduce the deficit to 5.4% of GDP by year’s end.
But political uncertainty looms large. Opposition parties have vowed to topple Bayrou’s minority government when the confidence vote takes place on September 8. Business leaders at the same conference warned that the political standoff is already weighing on confidence and could slow the economy.
Adding to the turbulence, fresh polls show that most French citizens want new national elections, signaling both public frustration and the possibility of prolonged instability. Photo by Jacques Paquier, Wikimedia commons.
