After Fitch’s warning shot, the American agency Standard and Poor’s will give its verdict on France’s rating, which could drop from AA to AA-. This new downgrading of the French rating will be enough to scare investors. But Bercy has done its utmost to avoid such a scenario.
Maximum pressure on Bercy… This Friday evening, when the financial markets close, the American agency Standard and Poor’s will give its verdict on France’s rating, which could drop from AA to AA-. After Fitch’s warning shot a few weeks ago, a further downgrading of the French rating may be enough to scare investors, drive up borrowing rates and therefore, ultimately increase the debt burden. But Bercy has done its utmost to avoid this scenario.
Reduce public debt to 108% of GDP in 2027
Bruno Le Maire met with analysts from the agency to detail France’s budgetary trajectory. Bercy wants to contain the public debt, nearly 3,000 billion euros currently, by reducing it to 108% of GDP in 2027. Same thing for the public deficit, which must drop below 3%. In addition, Elisabeth Borne asked her ministers to identify 5% savings within their perimeters. And in the home stretch, the government has frozen 1% of public spending planned for 2023, or nearly 2 billion euros.
But for the economist Marc Touati, all these efforts are in vain. “If Standard and Poor’s does its job, it must downgrade France’s rating. Even if the government is trying to give serious pledges, it announced several months ago that the public deficit would increase further in 2023. And so we are not credible, we do not keep our commitments”, he affirms at the microphone of Europe 1. The entourage of Bruno Le Maire evokes a minister at work and serene. “When you have passed an exam, you are waiting for the result, there is no point in beating yourself up”, confides a relative to Europe 1. “Whatever the note, Bercy will apply its strategy on public finances”, adds the even advise.
Source: Europe1
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