PARIS (Reuters) – The rating agency Fitch has lowered France’s credit rating to “AA-“, believing in particular that the political and social context could complicate the reduction of public spending.
In a press release released Friday evening, Fitch judged that the stability program sent this month by Bercy to the European Union was more ambitious than the previous deficit reduction program, aiming for 2.7% by 2027, but that he relied on growth forecasts that were more optimistic than his own forecasts.
The agency said it forecast gross domestic product (GDP) growth of 0.8% this year and 1.3% in 2024, against +1.0% and +1.6% for the government.
Recalling protests against pension reform, Fitch added that “political stalemate and (sometimes violent) social movements pose a risk to (Emmanuel) Macron’s reform agenda and could create pressure for a more expansionary fiscal policy or a reversal of previous reforms”.
In the short term, spending pressures will remain strong, knowing that a third of them, notably pensions and social benefits, are indexed to inflation. In the medium and long term, the recent adoption of the reform raising the legal retirement age to 64 will have a moderately positive impact, Fitch added.
The rating agency noted that France’s public debt/GDP ratio at the end of 2022 (111.6%) was the highest of countries classified in category AA, whose median is 48.4%.
(Written by Jean-Stéphane Brosse)
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