Emmanuel Moulin told France Inter that France must fix its own budget troubles and that the European Central Bank’s job is fighting inflation, not bailing out national finances.
France’s rising borrowing costs show a bigger budget gap and political uncertainty. The uncertainty is about whether Parliament will approve the cuts and tax changes the government says it needs. Bank of France Governor Emmanuel Moulin said the solution should come from a budget that reduces the deficit at home. He urged against relying on a rescue from the European Central Bank (ECB).
Budget politics drive France’s borrowing-cost pressure
Moulin described the situation as “serious” but said he did not think the European Central Bank needs to intervene “as of now, given the current conditions,” putting the emphasis on domestic policy choices rather than central-bank rescue.
He said “the solution is here at home,” calling for Parliament to pass a budget that aims to cut the deficit instead of relying on support from Frankfurt.
The government presented its 2027 budget bill on October 1. It aims to reduce the budget deficit from 5.4% of output this year to 5% in 2027. Moulin and officials say this target is key to restoring fiscal credibility. Markets show these worries: the premium investors demand to hold 10-year French debt over German bunds rose to near 160 basis points during the sell-off. It later narrowed to about 127 basis points on a rebound. Moulin and others link this move to doubts about whether a minority government can secure the needed measures to meet the planned deficit path.
Moulin and others clearly connect the bond market move to fiscal imbalances and political uncertainty. They argue France must restore credibility by shrinking the deficit. They say France should not expect support from the ECB.
What the ECB can (and cannot) do
Moulin drew a line between monetary and fiscal roles, saying the ECB’s mandate is to fight inflation and that resolving an individual country’s fiscal problems is a domestic task.
Finance Minister Roland Lescure echoed that stance, saying France is far from needing the ECB to step in despite soaring yields, signaling that Paris does not see central-bank intervention as the immediate answer.
That position contrasts with proposals from some politicians who want central-bank measures or unconventional fixes. Jean-Luc Mélenchon has suggested freezing or writing off some debt held by the Banque de France and the ECB, a step Moulin called “illegal, dangerous, and useless”.
Moulin and government officials plan to press for a domestically agreed budget that shrinks the deficit as their route to easing financing pressures, while stopping short of asking the ECB to become a fiscal backstop today.
This article was created with AI assistance.
