It is a financial snub, but also a political one for Emmanuel Macron. Friday evening, April 28, Fitch, one of the four main agencies responsible for assessing the solvency of the French state, lowered France’s rating by one notch, to AA– with a stable outlook. In question, not only the debt and deficit trajectory of the government, considered questionable, but also “political stalemate and social movements [parfois violents] » the country is experiencing, the agency said in a statement. These latter “constitute a risk to Macron’s reform agenda and could create pressure for a more expansionary fiscal policy or a reversal of previous reforms”laments Fitch.
However, the Head of State has always justified the need for pension reform for budgetary reasons first. On March 16, when activating article 49.3 of the Constitution which made it possible to adopt the postponement of the retirement age to 64 without a vote, but which also reignited protests everywhere in France, the president had even made it his main argument: “As it stands, the financial and economic risks are too great [pour courir le risque que la réforme ne soit pas adoptée] »he assured his ministers.
“This decision results in particular from a pessimistic assessment of Fitch regarding the growth prospects (…) and debt”Bruno Le Maire immediately reacted in a press release, recalling “the total determination of the government to restore the public accounts within the next four years”. The agency “underestimates the consequences of the structural reforms adopted for several months”further estimated the Minister of the Economy, citing the reform of unemployment insurance, that of pensions and the reduction of production taxes.
“Modest progress in fiscal consolidation”
In its opinion, Fitch specifies that it expects an improvement ” modest “ of the French ratio of debt to GDP, due to “relatively large deficits and modest progress in fiscal consolidation”. The agency fears weaker growth and inflation-inflated spending. In doing so, it drives a wedge into the stability program, this document presented Wednesday in the Council of Ministers and which must be sent to Brussels, in order to detail the path that France intends to follow to return to the 3% public deficit at horizon 2027. He precisely indicated that France has “accelerate its deleveraging”. Alas, the means of reaching the medium-term trajectory that Bercy has set itself “still need to be clarified”, points out Fitch. The agency expects a debt of 114.3% of GDP in 2027, when Bercy forecasts 108.3% (against 111.6% in 2022)…
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