France’s Central Bank Chief Urges Caution on Fuel Subsidies
“We have no more money,” Francois Villeroy de Galhau told a broadcaster, referencing the recent spike in fuel prices that surpassed €2 ($2.3) per liter, driven by fluctuations in the global oil market connected to tensions in the Middle East.
Opposition parties and labor unions have been pushing for tax relief, fuel vouchers, or price caps, but Villeroy de Galhau warned that such measures could intensify the public deficit, which currently hovers around 5%. “The risk is further deepening the deficits and paying even more for our mortgages and business loans,” he added.
The governor stressed that long-term remedies lie in achieving energy self-sufficiency and investing in the transition to cleaner energy, rather than relying on temporary subsidies.
He also noted that the ongoing Middle East conflict is expected to exert pressure on the French economy, contributing to slightly elevated inflation and slower economic expansion. The Bank of France anticipates first-quarter growth between 0.2% and 0.3%, with roughly 1% projected for 2026.
Regional tensions escalated after Israel and the US carried out joint strikes on Iran on Feb. 28, resulting in more than 1,200 deaths, including then-Supreme Leader Ayatollah Ali Khamenei.
In response, Tehran launched drone and missile attacks targeting Israel, Jordan, Iraq, and several Gulf states hosting US military installations.
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