With the new government taking office, the level of French debt has returned

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By Albertina Torsoli

(Bloomberg) –

France’s top ministers have reaffirmed their commitment to reduce debt after the Covid-19 epidemic forced President Emanuel Macron to splurge on unprecedented spending to prevent the economy from collapsing.

“I will be a relentless craftsman to keep our public accounts in a context that we know is difficult,” said Gabriel Atal, France’s new budget minister, in a speech in Paris on Saturday. France must “stay on track” to reduce its debt because it is “critical to the strength of our economy, our confidence in our country and the future of our young generation.”

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When Macron initially took office in 2017, he sought to use technological rigor to reduce the economy’s reliance on borrowing and to simplify the rules governing business activity. But the epidemic forced him to change course and take the “whatever cost” approach. The ministers of his new government will walk a fine line as they try to curb public spending while simultaneously trying to limit profitability from the cost of living.

Purchasing power was at the forefront during the presidential campaign and will remain a key issue in next month’s legislature elections as inflation continues to rise in the center and in France. The previous president’s government had already promised measures this year, including a 25 billion euro ($ 26.4 billion) energy price cap. Now that the European Central Bank has started raising interest rates, the cost of new loans will increase.

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The price of energy

“My second commitment will be to fight for every euro in the French people’s wallet,” Attal, a former government spokesman, said on Saturday. “We will take urgent, necessary action, especially for fuel and fuel prices, and this will be our first challenge.”

Economy and Finance Minister Bruno Le Mayer, confirming his role on Friday, spoke at the same event, stressing that the fight against inflation as well as controlling public accounts would be one of his top priorities.

Macron of France has named the new cabinet with the old name in the original job

At the same time, Le Maire has promised to take measures to reduce deficits, as well as to protect against price increases. Until Monday, he will attend meetings with key economic players in France, including the business federation Medf, to see what room there is for raising wages and holding some price increases.

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“I want to be clear,” Le Mayer said. “In order to effectively protect our countrymen, everyone must participate in the fight against inflation,” he said.

The finance ministry has already prepared a revised budget in which Macron promised re-election, such as increasing social benefits and food vouchers for poor families. It will be presented in Parliament on June 19 after the second round of Assembly elections.

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