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Europe needs to ramp up defence spending, but only a few countries—like Germany—can afford to take on significantly more debt, warned French central bank chief François Villeroy

de Galhau on Thursday.

Speaking at a conference in France, Villeroy emphasized the importance of fiscal discipline.
“We need fiscal consolidation and debt stabilization,” he said. “The deficit must return to 3%.”

He also noted that the push for higher defence budgets has already driven up long-term borrowing costs across the eurozone. Still, he added, interest rates in Europe remain lower than those in the U.S. Photo by The Jacques Delors Institute, Wikimedia commons.