France obtains a pardon. Following warnings from Moody’s and Fitch, the rating agency S&P decided this Friday, November 29, to maintain the rating it grants to French debt at “AA-“, without setting a negative outlook.
The decision by S&P Global Ratings comes at a time when the Government is multiplying its commitments to try to escape a motion of censure that could take place next week on the Social Security budget and, according to the executive, sink France in an “economic and financial crisis.” storm.
In this explosive context, Michel Barnier wanted to reassure. Despite the “adjustments” made to the budget project, which initially provided for an effort of 60 billion euros until 2025, the Prime Minister assured on Thursday that he was doing “everything possible to stay around 5%” of the deficit. public in relation to gross domestic product (GDP), compared to the 6.1% expected in 2024.
Political instability and slide in public finances
In May, S&P downgraded the French rating by one level, from “AA” to “AA-“, with a stable outlook, reducing the risks of a further downgrade in the immediate future.
Since then, in an already heavily indebted France, bad news has accumulated that appears among European fools: dissolution of the National Assembly, late appointment of the Prime Minister, spiraling public deficit…
Given the political uncertainty that has continued since the dissolution, the markets have also been somewhat agitated. After reaching its highest level since 2012 at the beginning of the week, the spread between French 10-year sovereign rates and those of Germany, considered a safe haven in Europe, narrowed slightly following Michel Barnier’s announcement to renounce raising taxes on the electricity beyond its previous level. The tariff shield.
Source: BFM TV
