ISTANBUL

France’s central bank governor on Wednesday warned against introducing new subsidies to offset soaring fuel prices, citing the country’s fragile public finances.

“We have no more money,” Francois Villeroy de Galhau told broadcaster RTL, noting that fuel prices recently surged past €2 ($2.3) per liter amid global oil market volatility linked to Middle East tensions.

Calls from opposition parties and labor unions for tax cuts, fuel vouchers, or price caps could further strain the public deficit, currently around 5%, he said. “The risk is further deepening the deficits and paying even more for our mortgages and business loans,” Villeroy de Galhau added.

He emphasized that energy independence and investment in the energy transition are the sustainable long-term solutions rather than short-term subsidies.

The governor also noted that the Middle East conflict is likely to weigh on the French economy, contributing to slightly higher inflation and slower growth. The Bank of France projects first-quarter growth of 0.2%–0.3% and around 1% for 2026.

Regional tensions escalated since Israel and the US launched joint strikes on Iran on Feb. 28, which have killed more than 1200 people, including then-Supreme Leader Ayatollah Ali Khamenei.

Tehran retaliated with drone and missile strikes targeting Israel, Jordan, Iraq, and several Gulf countries hosting US military assets.

Iran also effectively closed the Strait of Hormuz around March 1. The strategic waterway normally handles about 20 million barrels of oil shipments daily and roughly 20% of the global liquefied natural gas trade.