France loses its AAA rating with a negative outlook
France, Europe's second largest economy, has lost its triple-A rating by one notch on Moody's scale, citing an uncertain fiscal outlook and weakening economy, Reuters reported.
Source : https://www.marocafrik.com/english/France-loses-it...
France's downgradeMoody from the top AAA rating to Aa1, follows a cut by Standard & Poor's in January.It was widely expected but is still a blow to President Francois Hollande's efforts to convince the world that France's public finances and stalled economy can be fixed.Moody's decison was related to to a failure to confront the need for reform and a "sustained loss of competitiveness" in the country. Business leaders blame high labour charges and social welfare costs imposed on employers for flagging exports.
Finance Minister Pierre Moscovici said the downgrade was a motivation for the government to pursue reforms.The government was committed to meeting its target of cutting the public debt to 3 percent of GDP in 2013 from an estimated 4.5 percent this year, he said.
The German magazine Spiegel says that investors are not convinced the President Francoise Hollande has the will to reform the French economy and its inflexible labour market and to boost growth and competivity.
The downgrades by Moody and Standard and Poors points to concerns that France, rather than Spain or Italy, could be the true danger lurking in the heart of the euro zone. President Hollande appears half-hearted in pursuing far-reaching economic reform, which will include cutbacks in the public sector,Spiegel says and yhe might not have the political backing necessary to modernize the country's economy. A poll released by the newspaper Le Journal du Dimanche on Sunday indicated that Hollande's popularity has now decreased for six months in a row and stands at just 41 percent.
The International Monetary Fund forecasts minimal growth for France next year, hardly enough to relieve the country of its persistent budget deficit Spiegel notes and Moody's says that it thinks the French government's growth projections are over optimisitic.
Spiegel quotes the Economist saying that the french public sector in the country is bloated, consuming some 57 percent of France's gross domestic product, and debt has skyrocketed in recent decades from 22 percent of GDP in 1981 to over 90 percent today.
Spiegel concludes that there is little belief that France can change direction and enact the necessary reforms.
Finance Minister Pierre Moscovici said the downgrade was a motivation for the government to pursue reforms.The government was committed to meeting its target of cutting the public debt to 3 percent of GDP in 2013 from an estimated 4.5 percent this year, he said.
The German magazine Spiegel says that investors are not convinced the President Francoise Hollande has the will to reform the French economy and its inflexible labour market and to boost growth and competivity.
The downgrades by Moody and Standard and Poors points to concerns that France, rather than Spain or Italy, could be the true danger lurking in the heart of the euro zone. President Hollande appears half-hearted in pursuing far-reaching economic reform, which will include cutbacks in the public sector,Spiegel says and yhe might not have the political backing necessary to modernize the country's economy. A poll released by the newspaper Le Journal du Dimanche on Sunday indicated that Hollande's popularity has now decreased for six months in a row and stands at just 41 percent.
The International Monetary Fund forecasts minimal growth for France next year, hardly enough to relieve the country of its persistent budget deficit Spiegel notes and Moody's says that it thinks the French government's growth projections are over optimisitic.
Spiegel quotes the Economist saying that the french public sector in the country is bloated, consuming some 57 percent of France's gross domestic product, and debt has skyrocketed in recent decades from 22 percent of GDP in 1981 to over 90 percent today.
Spiegel concludes that there is little belief that France can change direction and enact the necessary reforms.
Source : https://www.marocafrik.com/english/France-loses-it...