Bank of France governor warns high rates could choke French public finances

Emmanuel Moulin, who has led the Banque de France since June, warned that France could be progressively choked by climbing interest rates if public finances are not reined in. His comments came as the government unveiled a draft budget for 2027 that seeks to bring the deficit down to 5% of GDP. Moulin stressed that adopting a budget that cuts spending and narrows the deficit would calm debt markets and help regain investor trust.

He noted recent unsettling movements in the sovereign debt market but said the outlook can improve with concrete fiscal consolidation. The budget will be examined by the National Assembly's finance committee, and its passage may be difficult given the government's lack of a parliamentary majority. Moulin rejected comparisons with Greece and said a European Central Bank rescue is not imminent, emphasizing that the safety net lies in political will to repair finances.