The Fitch Ratings agency downgraded Friday the rating of France to “AA +” to “AA” by combining it with a stable outlook mainly because of fiscal slippage. Fitch also described as “weak” economic prospects of the country and said that they weighed on fiscal consolidation and stabilization of the debt ratio.
“The French economy is expected to grow less than average countries in the euro area for the first time in four years, “said Fitch. The agency believes that the structural reform agenda of the government “does not appear sufficient to reverse the negative trends that affect the long-term growth and competitiveness.”
Fitch expects a growth product Gross Domestic Product (GDP) french 0.4% in 2014 and 0.8% in 2015, when “the depreciation of the euro and lower oil prices will support growth somewhat.” Despite the savings measures of € 3.6 billion announced by the government that will lead the 2015 deficit to 4.1% of GDP instead of 4.3% projected earlier, “it will not be enough to change the Fitch projections on the dynamics of the public debt of France, “the agency said.
Fitch also notes that 4.1% of GDP, the deficit for 2015,” does not present improvement compared to 2013 “. The government also plans a deficit of 4.4% for 2014 instead of 3.8% forecast in April. “In recent deviations in budgetary objectives (…) weaken fiscal credibility,” says the agency still adding that “this is the second time since late 2012 that the French government delays the goal of reaching the threshold 3% deficit “that calls for the European Union. The French government has postponed this goal in 2017.
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