The rating agency Fitch lowered France’s credit rating by one notch to “AA-“. Fitch said there was potential political deadlock in the country and protests that could pose risks to the reform agenda.
The rating agency Fitch has downgraded France due to high national debt. “Financials are weaker than peers,” Fitch said, downgrading France from AA to AA-.
A political stalemate and sometimes violent social movements posed a risk to President Emmanuel Macron’s reform plans, the rating agency said. “The social and political pressures reflected in the protests against pension reform will make fiscal consolidation more difficult,” it said.
outlook “stable”
Nevertheless, the rating agency assessed the outlook for the country as stable. Fitch is now predicting growth of 0.8 percent for the French economy for the current year, after forecasting 1.1 percent in November. She warned that “lower growth prospects and weakened competitiveness” could lead to another downgrade.
Despite massive resistance, Macron pushed through his pension reform, which includes raising the retirement age from 62 to 64. The President pointed out that the changes were necessary for the pension system to remain viable.
Le Maire promises structural reforms
Finance Minister Bruno Le Maire said Fitch’s “pessimistic” assessment underestimated the consequences of the reforms. He reiterated the government’s “perfect determination” to reduce the public deficit and debt. “I think the facts speak against Fitch’s classification. We can implement structural reforms and will continue to do so for the country,” Le Maire told the AFP news agency on the sidelines of the EU finance ministers’ meeting in Stockholm.
“We have a whole series of reforms ahead of us that will accelerate the transformation of the French economic model,” said Le Maire, referring to a bill for “green industries” that is due to be presented in a few days.