The executive is working to minimize the deadline, while preparing people’s minds for what it deems inevitable. Friday, April 26 in the evening, two rating agencies, Moody’s and Fitch, must give their opinion on the quality of the French signature, as they do every six months. If the probability that the Fitch agency, which lowered the country’s rating a year ago, would sanction it again is considered low, that of a reprimand coming from Moody’s is on the other hand seen as plausible. The latter had also sent a discreet signal at the end of March, emphasizing, in a brief comment, “the risks inherent in the government’s medium-term budgetary strategy, which is based on optimistic economic assumptions and revenues, as well as unprecedented reductions in spending”.
This passing exam complicates the government’s agenda, caught for two months in a succession of bad news on the budgetary front. In the space of a few weeks, Bercy had to correct almost all of its overly optimistic macroeconomic forecasts: its estimate of the public deficit for 2023, expected at 4.9% of GDP, turned out to be far below reality. , namely 5.5%, according to INSEE data published on March 26. A gap resulting from an overestimation of tax revenues of nearly 21 billion euros. Expected growth in 2024 was reduced from 1.4% to 1% on February 18.
Finally, the public deficit for 2024, still forecast at 4.4% a few weeks ago, was raised to 5.1% of GDP. Opposite, Bercy urgently promised 20 billion euros in new savings with immediate effect, only part of which has been detailed.
The political configuration in the National Assembly also complicates any desire for structural reform likely to restore budgetary credibility in the medium term. At this stage, only the upcoming reform of unemployment insurance is likely to reassure the agencies.
Little effect on ability to borrow
The latter have, until now, shown relative leniency towards Paris, taking into account social tensions during pension reform and the dynamism of the French economy compared to its neighbors. But even in the presidential camp, there is now doubt about the government’s ability to buy time. “The mass is said, we are heading towards a degradationadmits a heavyweight of the majority. But the bad news of recent weeks has had no effect on the markets, which have already anticipated it. »
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