2023-12-01 23:29:00
The executive can breathe. This Friday, December 1, S&P leaves France’s rating unchanged: AA with a negative outlook. The rating agency indicated that it leaves the rating with a negative outlook due to “uncertainty” regarding “France’s public finances in a context of a high budget deficit, although slowly falling, and a high public debt “.
Bercy feared a deterioration synonymous with sanction against the government’s economic policy. “This decision is consistent with the government’s choices in terms of public finances,” reacted immediately the Minister of the Economy, Bruno Le Maire. “More than ever, we remain determined to reduce public spending and accelerate France’s debt reduction. Our independence and respect for our national and European commitments are at stake,” he added. READ ALSO Debt: the day France lost its triple A
S&P indicated on Friday that it anticipated “a reduction in public debt as a percentage of GDP from 2025, albeit very gradually”, and estimated that “the pass-through of the increase in borrowing costs due to high interest rates will be gradual”.
“We believe that our budgetary forecasts still contain significant risks which could, if they materialize, further reduce France’s budgetary flexibility,” notes the agency, citing for example “stricter financing conditions” or “ increased political fragmentation” which would complicate policy implementation.
With this announcement, S&P closes the autumn reviews of the major rating agencies for France. The AA rating it currently gives it is equivalent to Moody’s Aa2. Fitch is one notch below with AA-, after lowering France’s rating in April. But where Moody’s assigns a “stable” outlook to its rating, S&P has a negative outlook, a sword of Damocles that everyone is wondering if (or when) it could fall on French public finances in a context of high interest rates.
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