The economic fallout from the crisis in Iran has cost France between 4 billion euros ($4.70 billion) and 6 billion euros, Finance Minister Roland Lescure said on Tuesday, as the government prepares new support measures alongside a freeze on some spending.
There has been a sharp rise in bond yields since the start of the conflict in the Middle East, and the subsequent increase in government borrowing costs alone are adding an extra 3.6 billion euros to the budget, Lescure told RTL radio.
Prime Minister Sebastien Lecornu’s government has pledged to fully offset the budgetary impact of measures aimed at helping households cope with the energy price shock triggered by the conflict.
Lescure said he would outline plans to freeze some spending at a meeting with lawmakers on Tuesday, stressing that the government would stop short of outright budget cuts.
He added that PM Lecornu would announce new measures on Tuesday evening to help consumers manage higher energy prices, with a particular focus on people who rely on vehicles for work.
France, which already has one of the largest budget deficits in the euro zone, can only afford support measures that are strictly targeted at those most in need, the government has said. So far, it has focused on emergency fuel subsidies for the transport, fishing and farming sectors.
The government is meanwhile facing pressure from the far right to introduce a costly cut in the 20% value-added tax on fuel, while the hard-left has called for energy prices to be capped.
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