Fitch Ratings on Friday downgraded France’s debt worthiness to “AA-” from “AA”, claiming the political deadlock and social movements posed a threat to President Emmanuel Macron’s reform policies which could in turn slow down the economy. It added the country’s “fiscal metrics are weaker than peers”.
“Public finances, and in particular the high level of government debt, are a rating weakness,” the credit rating agency noted.
“Political deadlock and (sometimes violent) social movements pose a risk to Macron’s reform agenda and could create pressures for a more expansionary fiscal policy or a reversal of previous reforms,” it added.
The agency warned that lower economic growth prospects and a decrease in competitiveness could contribute to a further downgrade in ratings.
We will continue with reforms: French government
After the release of the ratings, Finance Minister Bruno Le Maire said the government will continue to proceed with structural reforms to overhaul the economy.
“I believe that the facts invalidate Fitch’s assessment. We are able to implement structural reforms and we will continue to implement structural reforms for the country,” Le Maire was quoted as saying by AFP.
“Do not doubt our complete determination to restore the nation’s public finances. We have proven our ability… to pass reforms that transform the French economic model.”
The assessment by Fitch ratings comes barely a week after Macron suggested that his government may be in danger as far-right leader Marine Le Pen continues to make gains.
“Marine Le Pen will arrive (in power) if we are unable to respond to the challenges of the country and if we introduce a habit of lying or denying reality,” he said.
Macron also lamented that he was not involved sufficiently in selling his highly unpopular pension reform bill to the public.
“Perhaps the mistake was not being sufficiently present to give a substance to the reform and carry it myself,” Macron told Le Parisien newspaper.
The council was of the view that the government’s actions were in line with the constitution and that the retirement age should be raised.
However, the protests over the reforms are yet to stop. The Parisians are still taking to the streets and demanding that Macron restore the status quo, which according to Fitch, may further impede Paris’s economic growth.
(With inputs from agencies)
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