By Leigh Thomas

PARIS (Reuters) – A new French government led by Marine Le Pen’s far-right Rassemblement National (RN) will end decades of high budget deficits and abide by European Union fiscal rules, the party’s finance official told Reuters.

RN MP Jean-Philippe Tanguy is widely considered one of the most likely candidates for the post of French finance minister if his anti-immigration party wins an absolute majority in the two-round parliamentary elections on June 30 and July 7.

“We will not allow the deficit to get out of control. We will no longer use room for manoeuvre that France no longer has and we will put an end to 50 years of systematic budget deficit policy,” Tanguy said in an interview on Sunday.

Six days before the start of the first round of voting, economists say it is still unclear how much the far-right’s spending plans will be financed. President Emmanuel Macron’s centrist coalition has said the RN will explode the budget deficit and debt.

The RN is keen to demonstrate that it can be trusted to manage public finances when it comes to power for the first time after years on the political fringes.

Macron called for new elections after his centrist party was crushed by the RN in this month’s European elections. His move initially sparked a massive sell-off in French stocks and bonds as investors feared a takeover by the far right or the far left – both of which are fixated on costly spending policies.

By promising to counter declining living standards among voters, the RN expanded its support in the EU elections far beyond its traditional strongholds in the northern rust belt and on the Mediterranean coast.

According to opinion polls, the RN is still ahead of its competitors, but may not achieve an absolute majority in parliament.

Tanguy said his party’s program would be entirely financed by closing tax loopholes, reducing bureaucratic hurdles and cutting spending, particularly on welfare for immigrants.

“We will not have the leniency (of the financial markets) that Macron enjoyed,” Tanguy said.

EU DEFICIT TARGET

Tanguy said France must stick to the current government’s plan to reduce the deficit to three percent of gross domestic product (GDP) by 2027, in line with its commitments under the EU’s fiscal framework, the Stability and Growth Pact.

“The Stability Pact must be respected,” said Tanguy. “France must keep its word.”

Sylvain Bersinger, chief economist at the consulting firm Asteres, said that social cuts, tax loopholes and the fight against tax fraud would hardly lead to major savings.

When asked whether the RN’s promise to reduce the deficit in line with EU rules was credible, Bersinger said: “I don’t believe that for a second.”

“Even if it appears that the RN is cutting back on the expenditure side of its program, it is certain that this will increase the deficit. However, the exact extent is difficult to quantify as it depends on the specific measures taken.”

Investors and rating agencies have expressed concerns about the RN’s measures, such as its pledge to cut energy VAT from 20% to 5.5%, which Standard & Poor’s said could further weigh on France’s rating after downgrading the country last month.

The outgoing government has already tried to push through spending cuts of 20 billion euros ($21 billion) for 2024 and an equal amount for 2025 after France’s budget deficit unexpectedly widened to 5.5 percent of national output this year.

Nervousness in financial markets over French politics has eased somewhat in recent days, which Tanguy said could be partly due to the European Central Bank’s ability to intervene when necessary to calm markets.

“This has been done before and will continue to be done independently, even if it is not necessary because the French economy is solid,” said Tanguy.

The huge savings of the French population could also help to cushion tensions on the markets, he added.

The RN has toned down some of its more radical plans, saying, for example, that the promised reduction in the retirement age from 64 to 60 for people with 40 years of work would only apply to those who started working before the age of 20.

The strategy seems to be paying off. According to an Ipsos poll published by the Financial Times, the RN is now considered the most trustworthy party in managing the economy and public finances.

Tanguy also said an RN government would not abandon Macron’s measures to attract banks and funds from London after Brexit.

He welcomed the new EU tariffs on imports of Chinese electric vehicles and added that the Royal Canadian Mounted Police supports free trade as long as it is done on fair terms. This is not the case in China’s case due to massive state subsidies.

“Maybe China will behave better. If we can restore fair trade, it will definitely be beneficial for everyone,” he said.

(1 US dollar = 0.9354 euros)

(Reporting by Leigh Thomas; additional reporting by Elizabeth Pineau; editing by Gareth Jones and Angus MacSwan)