PARIS: France’s government says it will provide 70mil in aid to a limited number of sectors over a short period as it seeks to cushion the economy from the impact of the Iran war without straining public finances.
Any new spending must be offset by cuts elsewhere and there is no need to increase credits to different ministries or revise the 2026 budget, Finance Minister Roland Lescure said at a briefing in Paris last Friday.
“My aim is to preserve growth while being careful with every euro spent.
“We have put together a graduated, targeted, sector-specific response limited to April that can be adapted,” he said.
The package includes 50mil fuel aid for small and medium-sized road transport firms, 5mil for fisheries, and 14mil for farmers.
France’s measures come as European governments struggle to tailor aid for businesses and households to unpredictable risks from the conflict in the Middle East.
Earlier this month, Italy cut excise duties on fuel and Spain approved a 5bil package.
This included cutting taxes on electricity.
But the French government has hesitated to follow suit after vast spending on measures to shield consumers from price hikes in 2022 contributed to a sharp widening of the budget deficit.
Adding to the challenges, French bonds have come under selling pressure in the last two years as governments collapsed trying to repair public finances.
Lescure said France is in a better position than many other European countries as the dominance of nuclear power in its energy mix makes it much less reliant on gas and oil.
The minister said he is coordinating with European colleagues and reiterated that France will host a Group of Seven video meeting today with energy and finance officials, central bankers, and representatives from the International Energy Agency and the International Monetary Fund.
“We will discuss national and international energy markets, the impact on financial markets and the economic impact,” Lescure said.
The restrained support package came within hours of France announcing its budget deficit was significantly narrower than the government target last year, providing more leeway for state support.
Still, Prime Minister Sebastien Lecornu said earlier last Friday that with a deficit at 5.1% of economic output last year, France must continue to make savings whatever the circumstance and fallout from the Middle East conflict.
For now, the government has not made any formal adjustment to its growth forecasts.
This is even as European peers, including Germany and Italy, are among countries weighing reductions to their official projections.
Earlier last week, French statistics agency Insee’s short-term outlook showed growth would hold up through the first six months of 2026.
According to that assessment, even with zero growth in the second half, the economy would register a 0.9% expansion for the whole year, close to the government’s 1% forecast. — Bloomberg
