Monday 13 February 2017 2:16 pm

Le Project Fear: Frexit will cost France €30bn, says bank governor

Marine Le Pen’s plans to pull France out of the European Union will raise the costs of servicing the country’s debt by roughly €30bn (£25.5bn), according to the governor of the Banque de France.

Speaking on French radio, François Villeroy de Galhau warned quitting the Eurozone and the single currency will “impoverish” France.

“With the euro, we have built a good currency, a solid currency. The euro is a currency that keeps its value and that’s why it inspires confidence,” he said.

The governor was responding to plans put forward by the far-right National Front party, headed by Marine Le Pen, to redenominate €1.7 trillion of French national debt into a new French currency shortly after coming to office. Such a move would cover 80 per cent of France’s total €2.1 trillion public debt. Ratings agencies have suggested the proposals would be regarded as major sovereign default with repercussions for the the world economy.

The governor also weighed in on the extent to which investors had begun to “factor in” Frexit.

“The recent increase in French rates — which I believe is temporary — corresponds to a certain worry about the exit from the euro,” he said.

France goes to the polls on 23 April. Polling suggests Le Pen will be placed second in the Presidential election, but could come first in the initial round of voting.

Writing for Market Watch today, former banker and author Satyajit Das warned investors are not taking the possibility of Frexit seriously enough.

“The pundits are relying on history — in 2002, Jean-Marie Le Pen (Marine’s father) went through to the second round but was defeated by Jacques Chirac, with the support of his opponents who could not bring themselves to vote for the controversial National Front candidate,” he said.

“But the past is not an accurate predictor of the future. Marine Le Pen’s chances are much stronger than believed.”