The rating agency Fitch Ratings downgraded Friday the rating of France from AA + to AA by combining it with a stable outlook mainly because of fiscal slippage. Fitch also described as “weak” economic prospects of the country and said that they weighed on fiscal consolidation and stabilization of the debt ratio. “The French economy is expected to grow less than the average of countries in the euro zone for the first time in four years,” said Fitch. The agency believes that the structural reform agenda of the government “does not appear sufficient to reverse the negative trends that affect the long-term growth and competitiveness.”
Fitch expects an output growth Gross Domestic Product (GDP) french 0.4% in 2014 and 0.8% in 2015, when “the depreciation of the euro and lower oil prices will support growth somewhat.” Despite the savings measures of € 3.6 billion announced by the government that will lead the 2015 deficit to 4.1% of GDP instead of 4.3% projected earlier, “it will not be enough to change the Fitch projections on the dynamics of the public debt of France, “the agency said.
” The current policy is beginning to bear fruit “
In a statement, the minister French Finance Michel Sapin assured that “the policy is beginning to bear fruit, as companies benefit from the first effects decreases samples that will continue in the coming years.” “In a difficult economic environment in Europe, the government maintains its course with the implementation of planned savings, with the continuation of reforms needed to boost growth and make them more competitive”, explains Michel Sapin.
Fitch points out that 4.1% of GDP, the deficit for 2015, “shows no improvement over the 2013″. The government also plans a deficit of 4.4% for 2014 instead of 3.8% forecast in April. “In recent deviations in budgetary objectives (…) weaken fiscal credibility,” says the agency still adding that “this is the second time since late 2012 that the French government delays the goal of reaching the threshold 3% deficit “that calls for the European Union. The French government has postponed this goal in 2017.
According to the draft 2015 budget, the French authorities believe that the debt ratio will peak at 98% of GDP before declining to 97.3% in 2017 and 92.9% in 2019, says Fitch stresses, however, that “the capacity of public finances to absorb shocks is significantly reduced.”
“The French debt among the safest in the world”
“The French debt is among the safest and most liquid in the world with a debt load contained,” said the French government in a statement ensuring that investor confidence “feeds on a coherent economic strategy that the government intends to pursue. “
Fitch had threatened to lower the rating of France in mid-October. On 10 October, its rival Standard & Poor’s had also warned by passing to “negative” instead of “stable” the prospect of changing the note of the French debt, it remained at AA. Standard and Poor’s is traditionally tough on France, it had been the first to deprive it of its triple A in January 2012. His rival Moody’s and Fitch recently continued to give the second highest rating possible in quality of French debt, while S & amp; P had already descended to the third notch
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