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Finance

France looking at option of defence loan

Published by Global Banking and Finance Review

Posted on March 7, 2025

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PARIS (Reuters) - A budget-constrained France could launch a national loan to fund plans to beef up its defence spending, Prime Minister Francois Bayrou and Finance Minister Eric Lombard said on Friday.

European countries are hastening to boost defence spending and maintain support for Ukraine after President Donald Trump froze U.S. military aid to Kyiv and raised doubts about Washington's commitment to its European NATO allies.

Lombard told a news conference on Friday that a national loan dedicated to defence was "among the tools that we can choose from".

Bayrou told Europe 1 radio and Cnews TV that such a loan was "a possibility, but we would still have to decide on it", and no such decision had yet been taken.

In a televised address on Wednesday, President Emmanuel Macron said France would spend more on defence - though he did not say how much more. He said there would be no tax increases to finance that, but tough choices would have to be made.

His push to beef up French defence spending will not be easy as, with one of the biggest budget deficits in the European Union, France is under mounting pressure to rein in overall spending. It passed its 2025 budget last month only after weeks of delay in a deeply divided parliament.

(Reporting by Dominique Vidalon; Editing by Peter Graff)