Tax hikes must be part of French debt reduction drive, cenbank chief says

PARIS (Reuters) – The bulk of France’s debt reducing drive must come from spending cuts but tax increases will also be required, notably if they target wealthy taxpayers and large companies, French central bank chief Francois Villeroy de Galhau said on Wednesday.

Villeroy, in comments to BFM TV, said he recommended a balance of 75% coming from savings and 25% from higher taxes until France reached its budget deficit target of 3% of gross domestic product (GDP).

Stressing that France had “too much deficit, too much debt”, Villeroy also reiterated comments he made on Tuesday that France could no longer realistically reduce its budget deficit to the European Union’s limit of 3% as planned by 2027 and should spread its belt-tightening efforts over five years.

The country’s current budget deficit target for this year is 5.1% of GDP.

France’s new Prime Minister Michel Barnier has yet to say whether he plans on retain the outgoing government’s target of cutting the public sector budget deficit to 3% of GDP by 2027 and how he plans to tackle the deficit.