France Faces Post-Election Budget Strategy Uncertainty, Says Villeroy

France needs quick clarity around its budget strategy following a snap parliamentary election, according to Bank of France chief Francois Villeroy de Galhau. The country's bonds and stocks have underperformed amidst concerns over economic policies. Villeroy emphasizes the importance of a clear economic strategy post-election to address the growing public deficit.

(Adds more Villeroy comments, context) PARIS, June 12 (Reuters) -

France needs quick clarity around the budget strategy for the country once a snap parliamentary election is over, Bank of France chief and European Central Bank (ECB) policymaker Francois Villeroy de Galhau said on Wednesday. French bonds and stocks have underperformed other European markets this week after President Emmanuel Macron called for a snap parliamentary election. Macron's shock move came after France's far right pummelled his own party in last weekend's European election.

Macron's government had been under pressure from ratings agencies, the IMF and the national fiscal watchdog to detail budget cuts planned this year and next to reduce the ballooning public deficit. Those spending cuts are now in doubt. "I think it is important that, whatever is the result of this vote, France can quickly clarify its economic strategy and in particular its budget strategy," he told Radio Classique.

"What we have said in our outlook, is that inflation in France should go below 2% from the start of next year, and could even come in on average at 1.7% in 2025," added Villeroy. Earlier this week, the Bank of France lowered its growth forecasts for 2025 and 2026 due to government belt-tightening while maintaining its forecast for this year at 0.8%.

"The Bank of France has no business commenting or speculating on politics (...) before the announcement of the dissolution, we were already saying that there were high risks to our forecasts," Villeroy said. A poll this week projected Marine Le Pen's National Rally (RN) emerging from the vote as the dominant party in the lower house.

Though parties have yet to put their platforms together for the legislative election, the RN plan is likely to be massively costly for the public finances

, judging by proposals from the last parliamentary election in 2022.

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