Relief at Bercy. The rating agency Standard & Poor’s (S&P) did not lower, this Friday, June 2, the credit rating of France, maintaining it unchanged at the “AA” level, citing an expected improvement in the budgetary situation as pleaded Emmanuel Macron’s government.
“This is mainly due to the revision of the government’s fiscal consolidation strategy”, writes the rating agencyciting as positive facts the scheduled end of energy aid and the recent pension reform.
In its note, S&P nevertheless maintains its “negative” outlook on France, which means that the country is not immune to a downgrade. The agency notes that the public debt will remain above 110% of GDP in the period 2023-2026, “with a persistent budget deficit, although declining”. The debt was at 111.6% of GDP in 2022, and the government is aiming for 108% in 2027. France has the highest debt of the countries in the “AA” category.
Five weeks ago, another agency, Fitch, on the contrary downgraded France’s rating by one notch. The AA rating is among the highest rating categories, signifying a strong ability to repay debts. In Europe, Germany and the Netherlands are among the highest rated countries, with the “AAA” level, which France lost in 2012.
The Mayor welcomes a “positive signal”
The analysis of the financial rating agency was eagerly awaited by French leaders anxious to display since the arrival at the Elysee Palace of Emmanuel Macron the image of good managers and reformers. A demotion would have represented a snub. “I take note of the decision of the agency Standard & Poor’s to leave unchanged the rating of the French debt”, immediately reacted to the JDD Economy Minister Bruno Le Maire. “It’s a positive signal. Our public finance strategy is clear. It’s ambitious. And it’s credible.”