French Finance Minister Warns Taxes Won’t Stop Energy Inflation

The French government is not ready to lower fuel taxes or give big subsidies after the price spike caused by the Iran war. Finance Minister Roland Lescure told lawmakers that cutting taxes would not help the shortage of energy supplies and could make inflation worse. Opposition parties want lower VAT on fuel, but France’s budget is already one of the largest deficits in the euro zone. Other European countries are taking different steps: Italy cut fuel duties last week, and Spain offered a €5‑billion aid package to soften the Middle East conflict’s impact. Lescure explained that when supply is tight, boosting demand with subsidies does nothing to increase the amount of energy available. Instead, it only pushes prices higher and fuels inflation. He said any support should be precise and temporary.

France’s current measures focus on keeping strategic oil reserves available, preventing price gouging at pumps, and giving loans or tax breaks to transport, fishing and farming. The country is less vulnerable to sharp oil and gas rises than some Asian and European neighbors. A steady $10 rise in oil prices could reduce growth by about 0. 1 percentage point, while a jump to $100 a barrel might cut growth by 0. 3‑0. 4 points and raise inflation by roughly one point. The minister also warned that higher interest rates could become a problem, even though France is still able to borrow easily. France has already issued about a third of its 2026 bond plan and is watching the situation closely.

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