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Fitch lowers France’s international rating for the country’s protests and pension reform


Economic, political and diplomatic blow: Fitch, one of the three major international credit rating agencies, downgraded France, assessing that “the political impasse and social protest movements pose a threat to the international financial credibility of Emmanuel Macron’s government.

Fitch, like Moody’s and Standard & Poor’s, uses ratings AA +, AA, AA-, A +, A and A- to assess the solvency of countries. Early Saturday morning, the agency decided to downgrade the French dimension to the AA level.

In the opinion of Fitch analysts, with the notorious impact on the world stage, the approval process of the new French pension law, during the past four months, seriously undermined the credibility of the political project Emmanuel Macron’s staff, with key political, social and economic indicators, budget and red.

In Fitch’s view, the ongoing social, economic and political crises “endanger Macron’s reform programme, favoring a more expansionary budget policy that would threaten past and promised reforms”. A risk that the agency considers to be serious.

In Fitch’s opinion, public debt will rise to 114.3% of GDP by 2027, well above Macron’s forecast.

Planned in his election campaign, first introduced last fall, and approved in mid-March, by decree without a parliamentary vote, the law reforming the national pension system has revealed a serious social crisis: a rosacea of ​​mass demonstrations and a protest will culminate on the 1st of May has a busy new day, when ringworm casseroles fuel a perpetual street protest. From the outside, the daily rosary of “concerts of fate” is a sight that does not bode well for French economic policy.

Fitch stresses that the social crisis has highlighted the underlying political crisis. The modest and relative parliamentary majority prevents the Macron government from making deferred promises. A bill aimed at combating illegal immigration more effectively has been delayed “indefinitely”, as it lacks a parliamentary majority. The whole of Macron’s “reformist ambition” raises questions.

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Fitch Ratings estimates that this personal and governmental political fragility poses a threat to the country’s large budget balances. The credit agency, such as the Court of Accounts, considers the government’s deficit and debt projections to be very optimistic. In Fitch’s opinion, public debt will rise to 114.3% of GDP by 2027, well above Macron’s forecast.

Government reaction

The downgrade announced by Fitch caused a very uncomfortable reaction from Bruno Le Maire, the Minister of Economy, at 3am on Saturday, merely commenting that “the agency’s decision is a pessimistic assessment of our growth outlook.”

The “pessimistic assessment” had been predicted, a day earlier, by the Court of Auditors, with very similar forecasts, indicating “more budgetary strictness” for Macron and his government.

Among the major international credit rating agencies, Moody’s, decided weeks ago not to change its note. On the other hand, Standard & Poor’s already announced last December that it may downgrade France in its next analysis of the situation, expected on June 1st.

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