(Bloomberg) -- France’s public finances have reached an “alert level” amid rising interest rates, surging inflation and dwindling growth, Finance Minister Bruno Le Maire said.

The candid warning comes as President Emmanuel Macron’s government seeks to negotiate a revised 2022 budget with opposition parties after he lost his majority at the National Assembly in elections earlier this month. 

“Not everything is possible, quite simply because we have reached an alert level for public finances,” Le Maire said on BFM TV Monday. “We used to be able to borrow at 0% or at negative rates, but today we are borrowing at more than 2%.

The finance minister also said debt charges on inflation-linked bonds will rise by “several billion euros” as prices surge at a record pace. 

Before presidential elections in April and the legislative vote in June, Macron’s government had earmarked around 25 billion euros ($26.4 billion) for a so-called “inflation shield” to protect households from surging prices this year. 

But Le Maire said proposals from opposition parties to further reduce fuel bills would now be “too expensive” at 20-25 billion euros. 

“We have public finances that must come back to balance between now and 2027 and it is imperative to reduce public debt because it compromises our independence and sovereignty,” Le Maire said.

 

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