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France Must Push on With Debt, Deficit Plans, Dombrovskis Says

Valdis Dombrovskis Photographer: Simon Wohlfahrt/Bloomberg (Simon Wohlfahrt/Bloomberg)

(Bloomberg) -- France needs to push on with plans to lower its debt load and narrow its deficit, according to European Economics Commissioner Valdis Dombrovskis.

“As we know France is now in a process of formation of the new government, so today we will be discussing medium term fiscal structural plan of France, where the Commission gave a positive assessment,” he told reporters in Brussels ahead of a meeting of European Union finance chiefs. “Of course it’s important that France sticks with its approach on bringing the budget deficit and public debt credibly on a downward path.”

France is in political turmoil after the lower house of parliament last week toppled the government for the first time in more than 60 years. President Emmanuel Macron is scrambling to find a new prime minister with enough support to avoid the same fate as Michel Barnier, the outgoing premier.  

But any new government would face the same financial and political constraints that sank Barnier’s administration. And since fresh legislative elections can’t be held until July at the earliest, there isn’t a quick fix to the country’s gridlock.

Barnier’s outgoing administration will present a stopgap spending bill to the full cabinet on Wednesday, to ensure the country can continue operating without a proper 2025 budget come January. 

France’s Finance Minister Antoine Armand spoke briefly to reporters in Brussels, but didn’t address the situation in his country.

The meeting will be hosted by Hungary’s Mihaly Varga, whose country holds the rotating EU presidency until the end of the year. Asked about the situation in France, he highlighted the political turmoil both there and in Germany, though adding that the spillover effect is bigger from the former than the latter.

The collapse of governments in France and Germany means those two countries have yet to submit fiscal plans to Brussels.

Dombrovskis said that can’t be helped, “this is part of the democratic process.”

--With assistance from Oliver Crook and Max Ramsay.

©2024 Bloomberg L.P.