Market: S&P maintains France’s rating, Bercy welcomes “a positive signal”.

PARIS (Reuters) – Ratings agency S&P Global Ratings maintained France’s credit rating at “AA/A-1+” on Friday, which Economy Minister Bruno Le Maire hailed as a “signal positive”.

At the end of April, another credit rating agency, Fitch Ratings, lowered its rating by one step to “AA-“, mainly citing a political and social context that is likely to complicate the reduction of public spending. Bruno Le Maire then lamented “Fitch’s pessimistic assessment”.

Asked by JDD after the decision by S&P Global, the Minister of Economy and Finance welcomed a “positive signal” given that the French strategy regarding public finances is “clear”, “ambitious” and “credible”.

Bruno Le Maire, who recently had “very close discussions” with S&P analysts according to Elisabeth Borne, confirmed to JDD the target set last April in the stability program sent to the EU to bring the deficit back to less than 3% of GDP in 2027 and debt of 108% of GDP at the same date.

This goal must be achieved thanks to previous or future reforms (unemployment insurance, pensions, green industry), the end of “whatever it costs” and the reduction in public spending, the minister informed JDD.

“On June 19, the conference on public finances will be an opportunity to identify the first savings measures, for several billion euros, which we will implement as part of the finance law for 2024. And this summer, the programming law for public finances will specify the course forward to 2027”, he clarified further.

“This debt reduction and deficit reduction strategy, we must stick to it with the greatest possible firmness. I am a guarantor of this firmness”, he added.

In its assessment, S&P also maintains the credit outlook at “negative”, believing that tighter credit conditions and still high inflation will weigh on economic activity in France in 2023 and 2024.

The rating agency predicts that the French budget deficit will fall to 3.8% in 2026, from around 5% in 2023, and that debt will remain above 110% of gross domestic product.

S&P Global (formerly Standard & Poor’s) lowered France’s outlook to “negative” last December from “stable” earlier due to growing risks to public finances and the resulting budgetary implications.

(Written by Blandine Hénault and Jean-Stéphane Brosse, with contributions from Leigh Thomas)

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