The European rating agency Scope lowered France’s outlook on Friday, which means that its rating could be downgraded in the future, as was the case at the end of April by the Fitch agency.
Scope explains its decision in a press release by the risk of the weakening of public finances, in particular due to difficulties in the implementation of reforms. This action means it could downgrade France’s rating, currently AA, the third highest on its grid, within 12 to 18 months.
Among the risks weighing on French finances, the agency notes that economic momentum slowed markedly in the second half of 2022.
It is also unconvinced of the trajectory of reducing the public deficit and debt, due to a poor record in terms of fiscal consolidation, a growing debt interest burden and risks linked to the implementation of the reform program.
These risks are linked to the lack of a majority in Parliament and socio-political disputes, citing in particular the disputes against the pension reform.
Established in 2011, Scope Ratings has its headquarters in Germany and branches in the UK, Italy, France and Norway.
At the end of April, the Fitch rating agency, one of the three largest in the world, had downgraded France’s rating, due to the risk posed by the political impasse and the (sometimes violent) social movements on the reforms desired by Emmanuel Macron.
A week earlier, the Moody’s agency had not made a rating. The S&P Global agency, which currently gives France an AA rating with a negative outlook, is due to publish its findings on June 2.
The rating of these agencies has repercussions on the interest rate at which investors lend money to France. On the 10-year loan, the term that refers, the rate was 3.11% Friday, close to its highest levels of the year.
Bond rates have risen sharply for a year and a half, due to the policy of central banks implemented to try to control inflation.