PARIS: After Fitch’s poor rating in April, France is already in the table with ratings agency S&P Global’s assessment of the French economy on Friday, which could lead, like its counterpart, to a downturn in the form of a snub to the government.

Pressure increased two days before the deadline, taken very seriously by a government that wants to present a solid economic policy and serious budget.

Asked on Sunday, Prime Minister Elisabeth Borne said on Radio J that the Minister of Economy had “very close discussions” with the agency “about everything we are doing for control our public finances“.

The government will be “stubborn” on reducing the deficit, hammered on Wednesday by Bruno Le Maire at France Inter, assessing “convincing” the “good arguments” developed before the S&P while admitting “very frankly” to ignoring what would be the agency’s decision This .

Loan to France

France is rated “AA” by S&P Global, formerly Standard and Poor’s, one of the three most influential rating agencies in America, along with Fitch and Moody’s. It could drop Friday night’s record one notch, to “AA-” but also issue nothing, which would then represent keeping France’s record unchanged.

Friday’s banknote degradation could impact French borrowing rates rising from investors, the latter of whom are demanding more to agree to lend to France.

However, interest rates on 10-year loans are already at eleven-year highs due to interest rate hikes by the European Central Bank, which is fighting inflation and mechanically raising eurozone government lending rates.

S&P has rated France since 1975 and only downgraded it twice. It was also the first to withdraw from France as a “triple A” symbol in 2011, the best rating and symbol of excellent management, from which the small circle still benefits from three agencies such as Germany, the Netherlands and Australia.

Pension reform

In addition to rating updates, S&P Global’s comments will be scrutinized as the agency has highlighted in recent weeks the damaging effects of pension reforms and social protests on the government’s ability to pursue economic reforms, but has been praised by executives for six years.

In late April, Fitch highlighted the government’s “political deadlock” to justify a downgrade, and Moody’s “weak mandate” available to the government in comments which, however, did not result in a downgrade.

European rating agency Scope Ratings, less scrutinized than its peers but downgraded its outlook in France from “stable” to “negative” on Friday, underscoring the “absence of a majority in Parliament”, is likely to complicate the deficit and debt reduction trajectory.

Despite all pointing to the deteriorating political and social situation, Fitch Agency is the only institution that has denigrated France recently, angering President Emmanuel Macron: it is “grossly wrong in its political analysis”, and he chastised in an interview with Opinion Daily France.

However, in the face of numbers, France appears to have scored better than it should, Fitch said. It has the highest debt of countries in the “AA” category, and has twice the average debt in this category.

Regarding the deficit, the rating agencies expect it to be 5% of gross domestic product (GDP) this year and 4.7% next year, again far above the countries ranked in this category.

There is “certain confidence” from the rating agencies vis-à-vis the French economy, acknowledging sources in one of the three main agencies, highlighting the State’s “main role in the economy” as “weakening shocks and representing a stabilizing factor”.

On Scope, for example, a quantitative examination of the French economy earned an “A+” rating on Friday, but a qualitative examination, taking into account the specifics of the French economy, in terms of risks to Public Finances and Financial Stability, pushed it up two notches to AA.

“France is one of those countries where there are forces that are impossible to understand through macroeconomic or budget data alone,” Scope analyst Thomas Gillet told AFP.