In the midst of a budgetary storm, S&P, formerly Standard & Poor's, is offering the government some respite. The rating agency is maintaining France's rating this Friday at “AA-“, with a stable outlook, which means that the rating should not change in the near future after being downgraded last spring. France therefore keeps its 17/20 because the agency thinks that the government will succeed in consolidating its public finances. But the agency warns that it does not rule out a downgrade of the rating and “the government does not show itself capable of reducing the large public deficit, or if growth falls below our projections over a prolonged period”
This decision demonstrates the “credit given to the government” to restore public finances despite the “risque” policy, said French Economy Minister Antoine Armand.
“After 2025, the budgetary trajectory is uncertain” writes S&P
While maintaining the stable outlook means the rating is unlikely to move in the near future, S&P, however, emphasizes that it cannot rule out a deterioration “if the government does not prove capable of reducing its large public deficit or if economic growth falls below our projections for a long period”. In its analysis, S&P notes “several structural improvements” of the French economy in recent years, particularly in favor of competitiveness and employment, and believes that the measures proposed by the government in its draft budget would make it possible to reduce the deficit by a little less than one point of GDP . However, she emphasizes that there is “a considerable risk that these proposals could be further watered down”and that“after 2025, the budgetary trajectory is uncertain”.
In May, S&P lowered the French rating by one notch, from “AA” to “AA-”. The two other major global agencies, Moody's and Fitch, issued a warning in October by lowering the outlook to negative.
France
