The rating agency Standard and Poor’s warned Friday in France, which could see its rating fall if it does not launch vigorous reforms, or if taken in trap of deflation. S & amp;. P revised its rating outlook for long-term solvency of France, “AA” to “negative” against “stable”
The agency has traditionally been the most severe in against France. She was the first to take away the best score, the famous “triple A”, in January 2012 Its competitors Moody’s and Fitch still give far the second best quality of French debt rating, while S & amp; P is already down to the third notch. The “negative outlook,” S & amp; P means that the country has at least one in three chance of seeing his bill drop over the next 24 months. Marie-France Raynaud, Senior Analyst rating agency for France, detailed AFP three reasons for this decision. It found than expected and felt “the most degraded budget deficit” that could “deteriorate further” due to “flexibilities reduced revenue” .Raynaud also stressed that the goal of ‘debt stabilization (was) postponed. “
Finally, the analyst found that there was a “risk to the implementation of structural reforms announced” with the government expected to restore growth and fiscal consolidation. “There is a lack of strong track record in terms of implementing reforms in France” , she has pointed out, also citing possible social resistance. Raynaud stressed that low inflation, a Europe-wide phenomenon, was a “very important element” in the decision on France, because of its harmful role for public finances.
S & amp; P believes that fiscal deficits means the period 2014/2017 will reach 4.1% of GDP instead of 3.2%, according to the estimate provided by the agency in April
The finance minister Michel Sapin played down, repeating in a statement that the French debt remained “one of the safest in the world” and one more “liquid “, that is to say with a huge market for investors, who are not likely to have to keep their shares for lack of sellers, or not be able to buy when they want it. “The economic situation is having on our balanced budget, but the government has chosen to stay the course. (…) We will continue the reforms needed to sustain growth in the medium term “, assured Fir, which however also referred to the European dimension of the problem. “In a recovery situation still too weak and unusually low inflation in the eurozone, that each country should take responsibility and that a coordinated European economic policy is conducted in the service of growth” has he said.
Many poor indicators in the euro zone
For several weeks, the accumulation of bad indicators was the Eurozone the main downside of the global economy. Its poor economic performance take center stage now at the meetings of the economic leaders of the planet around the IMF and World Bank in Washington, with a rising tension around Germany. The economic engine of the euro area has experienced several failures in recent days, giving ammunition to those who argue that Berlin should “take responsibility” in the words of Fir, that is to say, to do more for the Eurozone growth, including its own good. German Finance Minister Wolfgang Schäuble had to step into the breach to defend the intransigence of Berlin: the growth can only be achieved “by signing checks” and “there is anyway not much learned “ in terms of growth, high public spending, he said in Washington
S & amp;. P for its part has also highlighted the role of European Central Bank, in a statement announcing the France that the note of the latter may decline if “the actions of monetary policy in the euro area noveau failed to prevent the risk of deflation.”
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