Bank of France Governor Warns About Impact of Exit from European Union
France is gearing up for presidential elections in May and far right leader Marine Le Pen has started debate around Frexit (French exit from European Union) after she promised French voters that she will ensure France leaving the European Union. Bank of France Governor Francois Villeroy de Galhau has warned French voters about the impact of French exit from the European Union on currency, economy and interest rates. Marine Le Pen has promised French voters control over their country but leaving European Union could have major impact on French economy. Interest rates in France have been rising in the recent months.
Political experts and money market experts have shrugged off the issue by saying that Le Pen has low chances of winning the second round of Presidential elections. However, her statements have already scared investors and currency market experts. Surveys suggest that Le Pen could grab first rank in the first round of presidential elections.
Villeroy de Galhau talked about rising interest rates but said that the phenomenon could be temporary. He added that leaving European Union can increase the cost of debt service for France by nearly 30 billion euros per year. Villeroy de Galhau even compared 30 billion euros to annual defense budget for France.
Politicians usually make bold statements without checking out the economic and sentimental impact of their statements.
In its recent ratings update, Moody’s has downgraded outlook for French economy. France could face economic issues in case Le Pen wins and she starts process for exit from European Union. However, Le Pen has also stated that she will first demand a few changes at European Union. If European leaders ignore her demands, she will not hesitate on trigger French exit from the European Union.
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