The decision was anxiously awaited. On Friday evening, the rating agency S&P Global did not lower France’s credit rating, keeping it unchanged at the “AA” level. She invoked an expected improvement in the budgetary situation thanks in particular to the pension reform of the government of Emmanuel Macron. The Minister of the Economy Bruno Maire welcomed a “positive signal”. “Our public finance strategy is clear. She is ambitious. And she is believable,” he told the Sunday newspaper (JDD).
“This is mainly due to the revision of the government’s budget consolidation strategy”, writes the rating agency, citing as positive facts, in addition to the pension reform, the scheduled end of energy aid in favor of the fall in hydrocarbon prices. five weeks ago, another agency, Fitchhad on the contrary lowered France’s rating by one notch, triggering protests from the government, which vowed to straighten out the nation’s accounts.
A “negative” outlook
The AA rating is among the highest rating categories, signifying a strong ability to repay debts. In Europe, Germany and the Netherlands are among the best rated countries, with the “AAA” level, which France lost in 2012.
In its note, S&P nevertheless maintains its “negative” outlook on France, which means that the country is not immune to a downgrade. The agency notes that the public debt will remain above 110% of GDP in the period 2023-2026, “with a persistent budget deficit, although declining”. Debt was at 111.6% of GDP in 2022, and the government is aiming for 108% in 2027. France has the highest debt of countries in the “AA” category.
After reaching 4.7% in 2022, the French public deficit should rise slightly this year to 4.9% before gradually declining from 2024, anticipates the government in its stability program published in recent weeks, which is counting on a return to the European budgetary peaks, i.e. below 3%, in 2027.