War in the Middle East: the French government plans to review credit freezes

Sébastien Lecornu said on Tuesday that he was considering reviewing the six billion euros in credit freezes planned to compensate for the “impact” of the war in the Middle East on public finances. “It’s a war, and I think that the 6 billion euros that we have documented will have to be updated, obviously, in the times to come,” declared the Prime Minister in the National Assembly, in response to a question from the leader of Horizons deputies Laurent Marcangeli.

At Matignon, we explain that this “update” does not necessarily mean an increase in the amount of these gels but a different distribution. Sébastien Lecornu is due to hold a press conference on Thursday on the economic consequences of this conflict, which is causing fuel prices to soar at the pump and increasing costs in several sectors of activity. On this occasion, he will present a “new package” of aid for the month of June intended for the most affected sectors, such as agriculture, fishing and construction.

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“This will last”: facing a crisis that drags on

To offset the cost of this war, the government announced in mid-April that six billion euros in spending savings could be made in 2026, in the form of credit freezes or “targeted cancellations”. The effort would weigh four billion euros on the State and two billion euros in “the social sphere”. The Prime Minister estimated that “unfortunately, this geopolitics has settled in the reservoir of the French (...) and, we see, in one form or another, this will last”, evoking the “crisis of imported inflation in energy”. Forced to budgetary discipline and threatened by a recession, the government has been procrastinating since the start of the war at the end of February on aid that it always wants to be “targeted” and not general, ruling out any reduction in taxation.

Sébastien Lecornu recognized, however, that the crisis was dragging on and that in this context it was necessary to “change scale”, promising not to abandon “anyone”. “Since the beginning, my obsession, that of the government, has been to ensure that entire sections of the country’s economic activity do not come to a halt,” he insisted on Tuesday. But he also wanted to rule out windfall effects. “Certain sectors must not take advantage of this, precisely, to exploit this inflation. Today, we must only see inflation on these costs derived from oil products and nothing else,” he explained.

In this regard, he instructed the Minister of SMEs Serge Papin to “clarify all the price impacts on the sectors and the construction industry”. He also asked his ministers Roland Lescure (Economy) and Sébastien Martin (Industry) to make “proposals” for the chemistry sector, “very highly exposed” to this crisis.