PARIS (Reuters) – France will have to quickly clarify its economic strategy, and in particular its budgetary strategy, after the legislative elections while the uncertainty created by the vote has caused tensions on the French sovereign debt, said on Wednesday the governor of the Bank of France, François Villeroy de Galhau.
“It will be important that, whatever the outcome of the election, France can quickly clarify its economic strategy and in particular its budgetary strategy,” he said on Radio Classique.
Since the announcement on Sunday of the dissolution of the National Assembly and the holding of legislative elections, the yield of the ten-year OAT has climbed to more than 20 basis points, while the gap with the German Bund rate of the same maturity, which measures the risk premium associated with French debt, jumped 20 points, to 63 points.
“French interest rates have actually risen for two days. Why? Because investors do not like uncertainty and an election period is always accompanied by uncertainties,” declared François Villeroy de Galhau.
Refusing to comment on the political situation in France, the governor called for a reduction in deficits.
“It is very important that we gradually reduce our deficits to preserve our sovereignty and our freedom of choice,” underlined François Villeroy de Galhau.
(Written by Blandine Hénault and Bertrand Boucey)
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