Michel Barnier can be satisfied. At the end of a particularly tough week for him, the Prime Minister obtained, on Friday, November 29, the support of the S&P for his austerity plan. The US rating agency maintained the AA– rating assigned to French debt, equivalent to 17 out of 20.
A predictable status quo, insofar as S&P had already downgraded France’s rating six months ago and is not in the habit of constantly changing it. The most surprising thing is that, despite the political turbulence, its experts trust the budget presented by Michel Barnier to effectively reduce the deficit. Therefore, in this phase the agency retains the “stable outlook” granted to the French banknote, which was not a fact.
S&P officials are not blind. In their analysis they highlight that “France’s public finances have deteriorated” in recent months and “The growing political fragmentation complicates” budget decisions. The agency even mentions “considerable risk” that the proposals being debated in Parliament are “diluted” or fall into the water. However, its central hypothesis remains that the authorities will manage to reduce the public deficit in “a little less than 1% of GDP [produit intérieur brut] » in 2025. It is for the future that they have more doubts: “Beyond 2025, the budget trajectory is uncertain” they write, “due to the very different budget proposals advocated by groups across the political spectrum.”
A message perfectly received in Bercy. “By maintaining France’s rating, S&P demonstrates the credit given to the government to reduce the deficit and restore our public finances,” The Minister of Economy, Antoine Armand, was quick to rejoice. “The agency, however, highlights the risk associated with political uncertainty that would call this trajectory into question,” duck. A way for the minister to warn MPs who want to overthrow the government during the budget…
In the midst of a chaotic budget debate that, according to the Prime Minister himself, risks leading to a ” storm ” From a political and financial point of view, the verdict signed by S&P also sounds like a warning to the government itself: it must resist, not relax, its efforts to restore public accounts. But this is, in fact, the threat that hangs over us.
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