The government had prepared the ground, just in case. In recent days, during lunches with the press, various ministers had suggested that the situation was not necessarily looking very good for France, weighed down by a public debt of more than 3,000 billion euros. But the American rating agency S&P Global finally chose, Friday 1er December, not to lower the grade it attributes to the French signature, which remains “ AA”. The Minister of the Economy, Bruno Le Maire, immediately welcomed a decision “consistent with the government’s choices in terms of public finances”, saying “ more than ever (…) determined to reduce public spending and accelerate France’s debt reduction.
The agency, which a year ago had attached France’s rating to a “negative outlook”, however maintained this monitoring on Friday evening, a way for it to remind that France still runs the risk of a sanction in the next months. She mentions in particular a “uncertainty” as to “public finances of France in a context of high, albeit slowly declining, budget deficit and high public debt”.
The assessments of the rating agencies are intended to inform investors likely to purchase bonds issued by France, as to the quality of the debt and the solvency of the country. A downgrade of the rating can cause an increase in the cost of financing on the markets, even if the effect is not mechanical. The stakes for France are all the more important as the French state plans to raise 285 billion euros of debt on the financial markets in 2024, a record amount.
Crusade
In the short term, the decision brings welcome relief to the executive, while Bercy has been on a crusade since the end of the summer in favor of the recovery of public finances. “We had a tough time this year, we met our deficit objective. We can discuss our trajectory of public finances but not the fact that we maintain our trajectory”, we summarized Friday in Bruno Le Maire’s entourage, a few hours before the announcement. Emmanuel Macron has set the objective for his second five-year term of debt reduction and a deficit below 3% of GDP by 2027.
Since the Covid-19 crisis which forced States to spend massively to support their economies, the rating agencies, much criticized during the previous sovereign debt crisis, have resumed their tables and calculators. As France finances around half of its budget through borrowing on the markets, the Bercy teams live to the rhythm of these decisions which, every six months, assess the financial solidity of the country.
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