French Finance Chief Says Government Collapse Dented Growth #FrenchFinance

(Bloomberg) — The toppling of France’s government last month has shaved 0.3 percentage points off output and deprived the state of much-needed tax revenue to repair the budget, according to new Finance Minister Eric Lombard.

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“Uncertainty brings investment and hiring to a stop,” he told BFM TV on Friday. “We have probably lost around 0.3 points of economic growth, so it’s very costly, and then €6 billion ($6.2 billion) of lost revenues.”

The minister’s comments come after the new administration appointed in December survived a no-confidence vote at the National Assembly on Thursday as both the far-right and most Socialists abstained.

The previous government led by Michel Barnier was voted out of power when it tried to push through a sharp reduction in the deficit to 5% of economic output from 6.1%.

Francois Bayrou, who took over as prime minister, has promised a smaller adjustment to 5.4%. He has also lowered the 2025 economic growth forecast in the budget to 0.9% from 1.1%.

Lombard, who has played a central role in offering concessions to the Socialists, said their abstention on Thursday indicates the fiscal plans can pass parliament this time.

“Thanks to yesterday’s decision, we will have a budget, and that is what is essential,” he said. “Having a new budget where there are no new taxes will reassure business leaders, and growth could pick up again.”

He added that further expected interest-rate cuts by the European Central Bank will also help to support the economy.

“Our priority is growth, business and protecting jobs,” Lombard said.

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