despite the drop in France’s rating, Bercy wants to be confident about the future

It’s a small earthquake for France. This Friday, the rating agency Fitch announced to downgrade France’s rating. From now on, the organization gives an AA- rating for France, while the country with a double A so far. Beyond the very high debt and deficit, the agency sanctions the possible political impasse linked to the pension reform, which would prevent France from restoring its public finances, in particular because of the major mobilizations of recent months.

Pessimism according to Bercy

But, on the side of Bercy, it is estimated that the rating agency is pessimistic about the future in France. “We will have to continue to reform to achieve the objectives of the stability program”, thus assures the Minister of the Economy, Bruno Le Maire, who believes that the reforms will continue despite the ambient protest.

Objective for the Minister: reduce the debt to 108% of GDP by 2027, against 111% currently, and post a public deficit below 3%. But the rating organization is particularly skeptical, while the government’s equation seems particularly complex, say some economists.

Limited room for maneuver on the government side

“If the government has to go a step further in reducing public spending, it will potentially be done to the detriment of certain households or certain companies”, thus assures the economist Mathieu Plane, at the microphone of Europe 1. The situation is “extremely delicate, especially since the government is rejecting any tax increase. Beyond even the question of leeway, it is the credibility of the government to pass reforms which may be difficult and which would be accepted”, which is called into question with this drop in rating, he continues.

In Bruno Le Maire’s entourage, Fitch’s note is put into perspective, emphasizing that it is only one agency among others and that it is not the most powerful. But in Bercy, we fear that the giant Standard and Poor’s will in turn downgrade the French rating on June 2. “There, it would be much more annoying”, admits the entourage of Bruno Le Maire.


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