The S&P rating agency maintains France’s rating and outlook

The S&P rating agency maintained France’s rating at « AA- » as well as its stable outlook, highlighting the government’s efforts to try to reduce the public deficit, despite political instability.

“Despite political uncertainty, we expect France to comply – with a delay – with the European budgetary framework and gradually consolidate its public finances in the medium term”indicated the American agency in a press release, emphasizing the nature ” open “ et “diversified” of the French economy.

While maintaining the stable outlook means the rating is unlikely to move in the near future, S&P stresses that it cannot rule out a downgrade. “if the government does not prove capable of reducing its large public deficit or if economic growth falls below our projections for a long period”.

French Economy Minister Antoine Armand welcomed S&P’s decision, which he said “testifies to the credit given to the government to reduce the deficit and restore our public finances”.

“However, the agency underlines the risk associated with political uncertainty which would call into question this trajectory”he added in a written reaction sent to the press.

The decision by S&P, which lowered France’s rating in May, comes as the French minority government is increasing compromises to try to escape a motion of censure, which could take place as early as next week on the budget of Social Security if he uses 49.3 to have it adopted without a vote.

The government has agreed not to increase a tax on electricity beyond its pre-tariff shield level, in order to satisfy the National Rally (RN) which threatens to ally with the left to overthrow it.

Despite the “adjustments” made in the draft budget, which provides for 60 billion euros of effort in 2025, Prime Minister Michel Barnier assured “everything to stay around 5%” public deficit in relation to GDP, after an expected slippage to 6.1% in 2024. France would return below the European ceiling of 3% in 2029, a trajectory validated by Brussels.

The leader of the RN, Marine Le Pen, however, did not seem willing on Friday to give up censoring the government next week, accusing it of concessions “not financed by structural economies” and of “precipitate the financial crisis”.

In October, Moody’s and Fitch maintained the French rating with a negative outlook.