French minister criticises Liz Truss for provoking UK economic disaster

AFP - THOMAS SAMSON

France's Economy Minister Bruno Le Maire said on Friday that he was worried by the financial turbulence in Britain, criticising Prime Minister Liz Truss's economic policies for causing a "disaster" of high borrowing rates for her country.

"I'm not worried about the situation in the eurozone," Bruno Le Maire told Europe 1 radio when asked about the risk of the crisis spreading. "On the other hand, I am worried about the British situation.

"What does it show? It shows firstly that there are costs for financial and economic policies," he said.

Truss's "mini-budget" announced last Friday included major tax cuts that will need to be financed by extra borrowing, spooking investors who immediately questioned the credibility of the policies and the stability of Britain's financial standing.

"When you take on major costs like that, with spectacular announcements, as some opposition parties want to do in France, it perturbs the markets. It perturbs financial balance," Le Maire said.

"And it leads to a real disaster with interest rates which are 4.5 percent or even higher in Great Britain. We have interest rates which are reasonable, which are quite close to Germany's, because there is consistency in our economic and financial policymaking," he said.

"The second thing is that leaving Europe comes with a considerable cost because Europe is a protection," he added, referring to Britain's exit from the European Union.

Pound falls to all-time low

The pound fell to an all-time low against the dollar and the yield on 10-year British government bonds -- which sets the cost of borrowing for the government -- briefly rose to above 4.5 percent on Wednesday.

That led the Bank of England to intervene with a 70 billion euro emergency bond-buying programme to stabilise the market.

Le Maire has been under pressure this week to explain his own budget choices, with the French government planning to borrow a record 270 billion euros next year and a run a deficit of 5.0 percent of Gross Domestic Product.

Some analysts suggest the deficit will actually be higher because of Le Maire's optimistic growth forecast for the economy and assumptions about savings from a controversial pensions reform that has yet not been passed by parliament.

Franco-British relations have been rocky for years, particularly under former Prime Minister Boris Johnson, with a host of issues, from Brexit and fishing rights to migrants, souring cross-channel ties.

French ministers have been reluctant to comment on Truss since she came to power, despite deep concerns about her post-Brexit policies and her statement while campaigning that she did not know if French President Emmanuel Macron was a "friend or foe".