Lagarde: I am convinced that Paris will make decisions to reduce investors' anxiety

The head of the European Central Bank (EBC) Christine Larde expressed on Thursday the belief that politicians in France would make decisions that would reduce investors' fears. She also stated that the euro area and its economy should be urgently strengthened because of the geopolitical context.

“I am convinced that decision -makers will take into account this period of uncertainty and do everything possible to reduce it,” Lagarde said, commenting on the political and budget situation in France.

Lagarde, who in the past was the Minister of Finance of France, spoke to the media in Frankfurt am Main, where the headquarters of the ECB is located. Her statements were given by the AFP agency.

In Paris, the Friday decision of the Fitch rating agency is expected to do the note of France. Due to the difficulty with a reduction in the French budget deficit, Fitch may reduce the note, but it can also keep it, in anticipation, after changing the government a new political configuration emerges – economist Gabriel Colletis said on TF1 television.

On Tuesday, President Emmanuel Macron appointed a new prime minister – Sebastien Lecorn. The previous government has collapsed against the background of disputes about the adoption of a savings budget and Lecorn, not having a majority in parliament, it must create a government that will manage to carry out the budget law by the Parliament by the end of this year. The previous government, managed by Francois Bayrou, wanted to reduce the budget deficit by finding savings in a budget for almost EUR 44 billion.

Lagarde announced on Thursday in a communiqué after the ECB board meeting that the management board considers the key “urgent strengthening of the euro area and its economy in the current geopolitical conditions.”

France's public debt, i.e. the amounts borrowed by her in the markets, is currently 115 percent. GDP. This places her in third place among the most indebted euro area countries – after Greece and Italy. The growth of debt contributed, among others Further crises in recent decades – financial and associated with Covid -19 pandemic. France is increasingly burdened with interest, the amount of which currently reaches EUR 53 billion. Already in 2026 their amount will increase to EUR 66 billion, which means that debt service costs will become the largest item in the budget, ahead of education expenses.

From Paris Anna Wróbel (PAP)

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