The ratings agency Moody’s has warned that it will cut French credit-worthiness again if the government fails to implement the reforms it has promised.
The agency dropped France’s coveted triple-A rating one notch to Double-A One, but with a negative outlook. Another agency, Standard and Poor’s also stripped France of its triple-A grade in January.
This latest move has been dismissed by the government.
Finance minister Pierre Moscovici said: “This downgrade does not raise a question-mark over the fundamental economics of our country, nor the reforms undertaken by the government, nor our good reputation for borrowing.”
Leading French economist Marc Touati is not convinced. “Clearly this downgrade makes sense and is merited,” he told euronews. “But what’s really important is the negative outlook. It means this downgrade is only the beginning. That’s the really bad news. Equally bad is that this downgrade came just after the government trumpeted that everything was going well in France, so that means that these announcements are not credible.”
The agency cited France’s vulnerability to external shocks from the euro-debt crisis as one of the reasons for the cut, particularly because of the strong links between its financial sector and the troubled southern European countries.
Our correspondent in Paris, Giovanni Magi reports:
“Moody’s move on France, like Standard and Poor’s, was expected. But it still represents a major new obstacle on the path towards the consolidation of public finances.”