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Debt: Fitch maintains its AA rating for France and its negative outlook


The rating agency notes that while the public deficit has fallen in 2021 and even more than expected, the macroeconomic outlook is clouded by the war in Ukraine and inflation.

The rating agency Fitch Ratings maintained Friday, August 5 at “AA“France’s long-term debt rating, again with an outlook”negativebecause of the pandemic which has increased public spending. “Covid-19 has left public debt significantly higher than in previous years“, she said in a press release.

The rating assigned to France is the third best on the Fitch rating scale, which has 22 levels. It corresponds to a high quality transmitter. The rating agency notes that while the public deficit has fallen in 2021 and even more than expected, the macroeconomic outlook is clouded by the war in Ukraine and inflation. “The pace of growth in economic activity declined in the first half of the year as consumer spending declined significantly“, notes Fitch Ratings.

2.4% growth

It thus forecasts growth of 2.4% over the whole of 2022, close to the forecasts of INSEE, which announced last week that it was counting on growth of 2.5%. Fitch then estimates the country’s growth at 2.1% in 2023 and 1.9% in 2024. As for the public deficit, the rating agency expects it to reach 5.2% of French GDP in 2022, when the government has set a target of 5%. It is betting on a decrease in the deficit in the following years, to reach 4% in 2024.

Finally, on the inflation side, the agency estimates that it should “slow down in the second half of the year, reaching 4.2% by the end of the year», depending on the evolution of energy prices. In July, the rise in prices reached 6.1% over one year, the highest figure since July 1985 according to INSEE.

France’s rating influences the conditions under which the country can borrow money on the financial markets. In May 2020, Fitch had lowered from “steady” at “negative» the prospect of France’s long-term debt rating, fearing a deterioration in public finances and the economy in the face of the health crisis. Another rating agency, Standard and Poor’s, also rates France’s long-term debt “AAbut feels his outlook is “stable”. She maintained that rating last October.



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