2023-12-02 15:28:00
Phew! Bercy can be relieved: on Friday December 1st in the evening, S&P Global Ratings announced that France retained its AA rating… but still with a negative outlook. Fitch remains the only rating agency to give France a lower rating (AA-).
In recent days, concern has increased. Given its performance in terms of public finances (the debt is expected to be around 110% of GDP for 2023, and the deficit to stand at 4.9% of GDP), France is in fact rated less harshly than many others country in its category. “It would not be so illogical for them to put us in the right box if they strictly applied these criteria,” we confided to Bercy during the week.
French reforms hailed by S&P
Fortunately for our country, the rating of States does not depend only on strictly quantitative benchmarks, but also on a series of economic and political considerations which allow the poor French student to be rated better than he should be. First, S&P anticipates a future improvement in our public finances, even if it will be far from dazzling.
In its press release, the rating agency welcomes the implementation of reforms, in particular those of pensions and the labor market (France Travail, compensation for the unemployed, etc.) which, according to it, should make it possible to improve the situation of our public finances.
Voluntarist declarations from Bruno Le Maire
“The Minister of the Economy, Bruno Le Maire, has also multiplied proactive declarations, such as the latest announcements concerning savings on State real estate or the desire to review the unemployment insurance system, and projects to reducing public spending have been launched,” underlines Norbert Gaillard, independent economist and specialist in sovereign risk. The government is counting in particular on public spending reviews to help it free up twelve billion euros next year.
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Another good point on the French side, French debt is an asset prized by investors, because it still inspires confidence: they particularly welcome the diversification of the French economy, or the capacity of the State to bring in tax in the coffers. “In addition, the AFT schedule is predictable, the debt is liquid and France has a good debt management technique,” underlines Patrick Artus, economic advisor at Natixis.
It remains to be seen whether this preferential treatment is a good thing for the country. It certainly allows us not to increase the cost of the debt… But it also prevents us from moving up a gear on the long road that remains to be taken to regain more solid public finances. “As long as we have not come close to catastrophe, we will not make any effort,” a former senior official recently told us. See you in six months for the next update.
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