PARIS (FRANCE) – French central bank head Francois Villeory de Galhau said on Saturday that the country’s public spending was reaching dangerous levels in the wake of the stimulus package to support the pandemic-hit economy.
“There’s a real alert and it is time to regain control (over public spending),” he told France Inter radio station.
“We can’t afford everything all the time,” he added, saying public spending has grown at 1% in real terms over the last decade.
Last month, the government announced a 100 billion-euro ($117 billion) stimulus package and it is equal to 4% of GDP. In fact, it is pumping more cash into the economy than any other European country.
“There is a justified debt which is the COVID debt, there is a dangerous debt which is the one under which we would live beyond our means for a long time,” Villeroy said.
He pointed out the risk of a lasting slippage in public spending increasing borrowing costs so much so that it would be increasingly difficult to repay the debt. There is even a risk of France being unable to borrow in the markets.
