Latest news with #CourdesComptes
Bloomberg
16-07-2025
- Business
- Bloomberg
Former French Finance Minister Moscovici on French Budget Proposal
"We have one of the largest deficits in the eurozone," says Cour des Comptes President Pierre Moscovici on Bloomberg TV discussing the 2026 budget proposal. "The Prime Minister is right to say this is a mortal peril," he adds. Moscovici continues: "The question is how will the political forces in France react because we need to find a compromise in the Parliament which is hung without a majority." (Source: Bloomberg)
Gulf Today
09-07-2025
- Business
- Gulf Today
France has become less attractive to foreign investors
Yoruk Bahceli and Leigh Thomas, Reuters France is missing out on the investor optimism that has defined Europe's markets this year, hamstrung by its strained public finances and political volatility that threatens to paralyse policy until at least 2027. Global investors and French executives cite the risk that budget negotiations could trigger another government collapse in the autumn, while pessimism among French households is dragging on consumer spending and economic growth. Centrist Prime Minister Francois Bayrou has faced eight no-confidence motions in parliament since taking office in December and his minority government is now struggling to find 40 billion euros ($47 billion) in spending cuts for the 2026 budget. The contrast with neighbouring Germany, whose new government is preparing to loosen historically tight purse strings and pump billions into the economy through defence and infrastructure spending, could hardly be starker. "While all the other highly indebted European countries — Greece, Portugal, Spain and Italy — have taken advantage of years of inflation to reduce their public debt ratio, France — whose deficit is now the highest in the euro zone — is increasingly diverging," said Pierre Moscovici, head of the Cour des Comptes public audit office and a former finance minister. To narrow the budget gap, Bayrou will have to convince opposition parties to stomach spending cuts only slightly smaller than those proposed in the 2025 budget that brought down his predecessor. Germany's historic embrace of looser fiscal policy and the impact of President Donald Trump's sometimes erratic policymaking on confidence in US assets have given a boost to European financial markets and other investments this year. A key beneficiary has been Italy, which has seen the risk premium paid on its 10-year debt compared to that of safe-haven Germany drop towards where it traded in 2010, before the euro zone debt crisis escalated. But the 10-year risk premium paid by French debt over German is still at 70 basis points, well above levels of around 50 bps seen before French President Emmanuel Macron called a shock snap election last summer. The French-Italian yield gap is meanwhile near all-time lows, even though Italy has a bigger debt pile. Candriam's chief investment officer Nicolas Forest said he favoured German, Italian and Spanish bonds and was underweight France, a situation he called "completely unusual". French stocks are missing out, too. The blue-chip CAC 40 index trades below where it was before the election was called and is lagging Europe's STOXX 600 aggregate. The Paris index has returned just 5% this year, four times less than Germany's DAX. Simon Blundell, co-head of fundamental European fixed income at BlackRock, the world's biggest investor, said he had no big positions in French debt and favoured Italian bonds, encouraged by political stability in Rome and declining volatility. Even if France's government survives the autumn, investors expect the budget squeeze to underwhelm as a fix for fiscal strains and so fail to increase the appeal of French assets. "Any compromise political parties find will be really temporary in terms of measures, and not great for debt reduction and deficit improvement," said Candriam's Forest. And even presidential and parliamentary elections in 2027 may not fully dispel the political uncertainty, if no party emerges dominant. To prod opposition parties to back Bayrou's budget, Public Finances Minister Amélie de Montchalin has suggested France could turn to an IMF bailout if it does not decisively grip its finances. Carrefour CEO Alexandre Bompard said such doomy talk only caused the French to save more, jeopardising a consumer spending recovery that he said was more fragile than in the supermarket giant's other European markets. "If we have 5 percentage points more savings than other European countries, it's because we have an extraordinarily high level of political and fiscal uncertainty," Bompard told an economics conference in Aix-en-Provence on Friday. With consumers hesitant to spend, French business activity has consistently lagged European peers this year, even though the private sector is less exposed to US trade tensions than Germany or Italy's more export-focused economies. Brushing aside any prospect of IMF intervention to prop up France's public finances, the Fund's French chief economist Pierre-Olivier Gourinchas insisted Paris could no longer put off getting its fiscal house in order. "France is not exempt from the laws of gravity, so we're going to have to adapt," Gourinchas said in Aix-en-Provence. "We can't fly, we're going to have to plan our landing and make spending cuts."
Reuters
09-07-2025
- Business
- Reuters
Political chaos leaves France sidelined as investors warm to Europe
LONDON/AIX-EN-PROVENCE, France, July 9 (Reuters) - France is missing out on the investor optimism that has defined Europe's markets this year, hamstrung by its strained public finances and political volatility that threatens to paralyse policy until at least 2027. Global investors and French executives cite the risk that budget negotiations could trigger another government collapse in the autumn, while pessimism among French households is dragging on consumer spending and economic growth. Centrist Prime Minister Francois Bayrou has faced eight no-confidence motions in parliament since taking office in December and his minority government is now struggling to find 40 billion euros ($47 billion) in spending cuts for the 2026 budget. The contrast with neighbouring Germany, whose new government is preparing to loosen historically tight purse strings and pump billions into the economy through defence and infrastructure spending, could hardly be starker. "While all the other highly indebted European countries - Greece, Portugal, Spain and Italy - have taken advantage of years of inflation to reduce their public debt ratio, France - whose deficit is now the highest in the euro zone - is increasingly diverging," said Pierre Moscovici, head of the Cour des Comptes public audit office and a former finance minister. To narrow the budget gap, Bayrou will have to convince opposition parties to stomach spending cuts only slightly smaller than those proposed in the 2025 budget that brought down his predecessor. Germany's historic embrace of looser fiscal policy and the impact of President Donald Trump's sometimes erratic policymaking on confidence in U.S. assets have given a boost to European financial markets and other investments this year. A key beneficiary has been Italy, which has seen the risk premium paid on its 10-year debt compared to that of safe-haven Germany drop towards where it traded in 2010, before the euro zone debt crisis escalated. But the 10-year risk premium paid by French debt over German is still at 70 basis points, well above levels of around 50 bps seen before French President Emmanuel Macron called a shock snap election last summer. The French-Italian yield gap is meanwhile near all-time lows, even though Italy has a bigger debt pile. Candriam's chief investment officer Nicolas Forest said he favoured German, Italian and Spanish bonds and was underweight France, a situation he called "completely unusual". French stocks are missing out, too. The blue-chip CAC 40 index trades below where it was before the election was called and is lagging Europe's STOXX 600 aggregate. The Paris index has returned just 5% this year, four times less than Germany's DAX. Simon Blundell, co-head of fundamental European fixed income at BlackRock, the world's biggest investor, said he had no big positions in French debt and favoured Italian bonds, encouraged by political stability in Rome and declining volatility. Even if France's government survives the autumn, investors expect the budget squeeze to underwhelm as a fix for fiscal strains and so fail to increase the appeal of French assets. "Any compromise political parties find will be really temporary in terms of measures, and not great for debt reduction and deficit improvement," said Candriam's Forest. And even presidential and parliamentary elections in 2027 may not fully dispel the political uncertainty, if no party emerges dominant. To prod opposition parties to back Bayrou's budget, Public Finances Minister Amélie de Montchalin has suggested France could turn to an IMF bailout if it does not decisively grip its finances. Carrefour CEO Alexandre Bompard said such doomy talk only caused the French to save more, jeopardising a consumer spending recovery that he said was more fragile than in the supermarket giant's other European markets. "If we have 5 percentage points more savings than other European countries, it's because we have an extraordinarily high level of political and fiscal uncertainty," Bompard told an economics conference in Aix-en-Provence on Friday. With consumers hesitant to spend, French business activity has consistently lagged European peers this year, even though the private sector is less exposed to U.S. trade tensions than Germany or Italy's more export-focused economies. "The economy is genuinely struggling, and you can see this in PMIs month after month where France is getting singled out for how weak it is," said Barclays' head of euro rates strategy Rohan Khanna, referring to the PMI surveys of company activity. Since January, economists polled by Reuters have downgraded France's 2026 growth forecast to 1%, while Germany's has been upgraded twice, to 1.3%. Brushing aside any prospect of IMF intervention to prop up France's public finances, the Fund's French chief economist Pierre-Olivier Gourinchas insisted Paris could no longer put off getting its fiscal house in order. "France is not exempt from the laws of gravity, so we're going to have to adapt," Gourinchas said in Aix-en-Provence. "We can't fly, we're going to have to plan our landing and make spending cuts." ($1 = 0.8542 euros)
Zawya
09-07-2025
- Business
- Zawya
Political chaos leaves France sidelined as investors warm to Europe
LONDON/AIX-EN-PROVENCE, France - France is missing out on the investor optimism that has defined Europe's markets this year, hamstrung by its strained public finances and political volatility that threatens to paralyse policy until at least 2027. Global investors and French executives cite the risk that budget negotiations could trigger another government collapse in the autumn, while pessimism among French households is dragging on consumer spending and economic growth. Centrist Prime Minister Francois Bayrou has faced eight no-confidence motions in parliament since taking office in December and his minority government is now struggling to find 40 billion euros ($47 billion) in spending cuts for the 2026 budget. The contrast with neighbouring Germany, whose new government is preparing to loosen historically tight purse strings and pump billions into the economy through defence and infrastructure spending, could hardly be starker. "While all the other highly indebted European countries - Greece, Portugal, Spain and Italy - have taken advantage of years of inflation to reduce their public debt ratio, France - whose deficit is now the highest in the euro zone - is increasingly diverging," said Pierre Moscovici, head of the Cour des Comptes public audit office and a former finance minister. To narrow the budget gap, Bayrou will have to convince opposition parties to stomach spending cuts only slightly smaller than those proposed in the 2025 budget that brought down his predecessor. OUT OF FAVOUR Germany's historic embrace of looser fiscal policy and the impact of President Donald Trump's sometimes erratic policymaking on confidence in U.S. assets have given a boost to European financial markets and other investments this year. A key beneficiary has been Italy, which has seen the risk premium paid on its 10-year debt compared to that of safe-haven Germany drop towards where it traded in 2010, before the euro zone debt crisis escalated. But the 10-year risk premium paid by French debt over German is still at 70 basis points, well above levels of around 50 bps seen before French President Emmanuel Macron called a shock snap election last summer. The French-Italian yield gap is meanwhile near all-time lows, even though Italy has a bigger debt pile. Candriam's chief investment officer Nicolas Forest said he favoured German, Italian and Spanish bonds and was underweight France, a situation he called "completely unusual". French stocks are missing out, too. The blue-chip CAC 40 index trades below where it was before the election was called and is lagging Europe's STOXX 600 aggregate. The Paris index has returned just 5% this year, four times less than Germany's DAX. Simon Blundell, co-head of fundamental European fixed income at BlackRock, the world's biggest investor, said he had no big positions in French debt and favoured Italian bonds, encouraged by political stability in Rome and declining volatility. Even if France's government survives the autumn, investors expect the budget squeeze to underwhelm as a fix for fiscal strains and so fail to increase the appeal of French assets. "Any compromise political parties find will be really temporary in terms of measures, and not great for debt reduction and deficit improvement," said Candriam's Forest. And even presidential and parliamentary elections in 2027 may not fully dispel the political uncertainty, if no party emerges dominant. REAL ECONOMY BLUES To prod opposition parties to back Bayrou's budget, Public Finances Minister Amélie de Montchalin has suggested France could turn to an IMF bailout if it does not decisively grip its finances. Carrefour CEO Alexandre Bompard said such doomy talk only caused the French to save more, jeopardising a consumer spending recovery that he said was more fragile than in the supermarket giant's other European markets. "If we have 5 percentage points more savings than other European countries, it's because we have an extraordinarily high level of political and fiscal uncertainty," Bompard told an economics conference in Aix-en-Provence on Friday. With consumers hesitant to spend, French business activity has consistently lagged European peers this year, even though the private sector is less exposed to U.S. trade tensions than Germany or Italy's more export-focused economies. "The economy is genuinely struggling, and you can see this in PMIs month after month where France is getting singled out for how weak it is," said Barclays' head of euro rates strategy Rohan Khanna, referring to the PMI surveys of company activity. Since January, economists polled by Reuters have downgraded France's 2026 growth forecast to 1%, while Germany's has been upgraded twice, to 1.3%. Brushing aside any prospect of IMF intervention to prop up France's public finances, the Fund's French chief economist Pierre-Olivier Gourinchas insisted Paris could no longer put off getting its fiscal house in order. "France is not exempt from the laws of gravity, so we're going to have to adapt," Gourinchas said in Aix-en-Provence. "We can't fly, we're going to have to plan our landing and make spending cuts." ($1 = 0.8542 euros) (Reporting by Yoruk Bahceli in London and Leigh Thomas in Aix-en-Provence, additional reporting by Dhara Ranasinghe, Dominique Patton and Mathieu Rosemain; Editing by Mark John and Catherine Evans)
Reuters
02-07-2025
- Business
- Reuters
France must squeeze spending or risk market backlash, says auditor
PARIS, July 2 (Reuters) - France needs to get its public finances back on track this year or risk pressure from unforgiving financial markets to do so in the future, the national public audit office said on Wednesday. Centrist Prime Minister Francois Bayrou is struggling to get public finances back under control after spending spiralled higher last year and tax income fell short of expectations. France saw its budget deficit expand further than any other euro zone country last year as a snap legislative election delivered a hung parliament, making bold decisions to correct the deterioration all but impossible. "We have a choice between making a voluntary effort now or suffering austerity tomorrow," the Cour des Comptes audit office head Pierre Moscovici said, adding markets were watching for missteps. As a first step to getting the budget deficit back to an EU limit of 3% of output by 2029, the government aims to reduce the deficit to 5.4% of GDP from 5.8% last year, a target Moscovici described as "reachable but fragile". Bayrou, a long-time debt hawk, has said he would outline plans in mid-July to cut spending by 40 billion euros next year to reduce the deficit to 4.6%. In France's deeply-divided parliament, opposition parties on the far-right and left are watching closely and could easily topple Bayrou's government as they did with his conservative predecessor, Michel Barnier. With interest payments on France's debt set to become the single biggest expense in the budget by the end of the decade, Moscovici warned that simply meeting the EU deficit target would not be enough to ward off a debt crisis. "To truly guarantee the sovereignty of the French debt, it is essential to return to a primary surplus, which is a prerequisite," Moscovici said.
