In addition, the rating agency lowered France’s growth forecast from +1.7 to +0.2%. The reason is soaring energy prices.
Source AFP
© JEAN-LUC FLEMAL / BELGA MAG / Belga via AFP
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L’rating agency S&P Ratings has maintained France’s debt rating but does not rule out lowering it due to the slowdown in its economy and the deterioration in public finances linked to the aid paid to households and businesses in order to compensate soaring energy prices. In a press release published on Friday, December 2, S&P announces in particular that it has lowered its forecast for French GDP growth in 2023 to + 0.2% against + 1.7% anticipated in July 2022, which leads it to lower it to “negative”. the outlook associated with its AA/A-1+ rating.
“The slowdown in the French economy and the measures taken by the government to cushion the surge in energy prices suffered by households and businesses will weigh on public finances,” said the rating agency. “We have lowered our growth forecast for the French economy to +0.2% from +1.7% during our July 2022 review and now anticipate a worsening of the budget deficit to 5.4% of GDP from 4% before,” continues S&P. As for the debt, it could reach “112% of GDP in 2025”.
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To these downgraded forecasts could “come on top of additional risks, further reducing France’s fiscal room for manoeuvre”, such as a prolonged economic recession, a deterioration in the budgetary situation and further delays in the timetable for reforms planned by the government.
“As a result, we are revising the outlook associated with French sovereign debt from “stable” to “negative”, while affirming its AA/A-1 rating”, concludes the rating agency. On November 4, the Fitch agency for its part confirmed the “negative” outlook that accompanies its AA rating.