2023-04-29 00:17:25
The change in France’s rating from “AA” to “AA-” on Friday April 28 by the rating agency Fitch is a “pessimistic assessment”, reacted in the wake of the Minister of Economy and Finance Bruno Le Mayor of Fitch, believing that the rating agency ” underestimates the consequences of the reforms ».
In its conclusions published on Friday, Fitch mentions “ large budget deficits and modest progress” about their reduction. The rating agency justified its decision by: political stalemate and (sometimes violent) social movements (which) pose a risk to Macron’s reform agenda “, in a press release.
“I believe that the facts invalidate the assessment of the Fitch agency. We are in a position to push through structural reforms for the country”said the minister this Saturday, April 29, citing the reform of unemployment insurance and that of pensions which have led to social movements. “And we will continue to pass structural reforms for the country”he added.
Demonstrations and strikes
Six weeks ago, the government definitively adopted its pension reform project providing for a postponement of the legal age from 62 to 64, thanks to the support of article 49-3 of the Constitution which makes it possible to pass a text without a vote in Parliament. This decision led to a clear hardening of the protest, and several days of violent demonstrations throughout the territory, recalling the episode of the yellow vests from 2018.
« The move sparked protests and strikes across the country and will likely bolster radical and anti-establishment forces “Says Fitch, which had matched its previous rating with a negative outlook, ie the risk of a downgrade.
The current deadlock situation could also “ create pressure for a more expansionary fiscal policy or a reversal of previous reforms “Said Fitch, which this time accompanied its “AA-” rating with a stable outlook.
Fitch is the first of the three main international rating agencies to downgrade the French rating since the adoption of the pension reform. Expected for an update of its rating last Friday, the Moody’s agency did not finally carry out any rating action, while the S & P Global agency, which currently gives France an “AA” rating with a negative outlook, is due to publish its findings on June 2.
Public deficit
After reaching 4.7% in 2022, the French public deficit should rise slightly this year to 4.9% before gradually declining from 2024, anticipates the government in its stability program published in recent days, which is counting on a back in the European budget nails in 2027. Fitch for its part anticipates a 5% deficit this year and 4.7% next year.
Debt reduction should experience a boost according to the government, with debt representing 108.3% of GDP in 2027, i.e. 4 points less than previously envisaged but still very far from the European objective of 60%. It was at 111.6% of GDP at the end of 2022.
Fitch also anticipates less robust growth than anticipated in its previous November forecasts. This would be 0.8% this year against 1.1% previously anticipated, and 1.3% in 2024 against 1.9% imagined in the latest forecasts. The government is counting on 1% growth this year.
#Bruno #Maire #regrets #Fitchs #pessimistic #assessment #downgrades #Frances #rating