• France's news in English

France vows deficit action over AAA threat

AFP · 10 Aug 2011, 15:22

Published: 10 Aug 2011 16:46 GMT+02:00
Updated: 10 Aug 2011 15:22 GMT+02:00

Facebook Twitter Google+ reddit

President Nicolas Sarkozy promised new measures Wednesday to slash France's public deficit amid fears that France could be the next country after the United States to suffer a top credit-rating downgrade.

The right-wing president broke off his vacation at the Riviera home of his pregnant pop star wife Carla Bruni to hold an emergency government meeting in Paris on the debt crisis rattling global markets.

"The head of state reiterated that the commitments to reduce the public deficit are inviolable and will be adhered to no matter how the economic situation evolves," his office said after the meeting.

Sarkozy asked his finance and budget ministers to come up with new ideas for sticking to France's deficit-reduction promises and these measures will be decided on on August 24, the president's office said.

The announcement came after government ministers sought earlier this week to head off speculation that France might be the next major country to lose its top AAA status after the United States lost the coveted credit rating last week.

Budget Minister Valerie Pecresse said France would "not deviate one iota" from its promise to cut its deficit from 7.1 percent last year to 4.6 per cent of gross domestic product next year and 3.0 percent, the EU limit, by 2013.

Sarkozy's return to Paris came as the debt crisis eased somewhat after the European Central Bank began buying Spanish and Italian bonds to lower their borrowing costs but investor jitters continue on fears the US and eurozone problems will spark a new recession.

The eurozone crisis is fuelled by fears that Spain or Italy might default on their debt and possibly spark a break-up of the currency shared by 17 countries.

EU leaders are trying to implement a July agreement aimed at beefing up the euro's defences. But many of the measures need national parliamentary approval and that process could drag on to the end of the year in some cases.

Standard & Poor's, the rating agency that downgraded US sovereign debt last week, said this week that it had no plans to take similar action against France because Paris had a clear policy to cut its deficit.

But French debt has faced pressure on the financial markets as the cost of credit default swaps, which are insurance policies against a default, hit record highs this week suggesting that investors were beginning to look at France more closely.

The International Monetary Fund said last month that France would probably need extra action to cut its public deficit in 2012 and 2013 as falling growth threatened to complicate economic recovery.

Story continues below…

It said that without further efforts France was set for a public deficit of 3.8 percent in 2013, above both the EU limit and the government's forecast.

The French central bank this week forecast that France would grow by only 0.2 percent in the third quarter.

The debt crisis has turned public deficits into a major issue in the run-up to next year's presidential election in France, which has not produced a balanced budget in three decades.

Facebook Twitter Google+ reddit

Your comments about this article

2011-08-10 20:33:20 by Mark S
France has one advantage over the US. No members of the French parliament have gone on TV saying "Our government SHOULD miss some payments on its debt". In the US, that HAS happened; when you come out and say "I might not pay back my bonds", a credit rating agency is entitled to take you at your word. There is a lot of risk in the Euro zone right now, and France does need to pay attention to the deficit, but France still intends to pay its debts.
Today's headlines
France’s 'Jungle' children arrive in UK
Authorities will start to clear the ‘Jungle’ migrant camp on Monday. Photo: Denis Charlet / AFP file picture

The first group of children from the French "Jungle" migrant camp with no connection to Britain have arrived in the country, the Home Office said Sunday, ahead of the camp's planned demolition.

French FM calls for end to Aleppo 'massacre'
French Foreign Minister Jean-Marc Ayrault says the international community cannot ‘come to a negotiation under the bombs’. Photo: Dominick Reuter / AFP file picture

France's foreign minister urged the international community to "do everything" to end the "massacre" in the Syrian city of Aleppo on Sunday after fighting resumed following a 72-hour truce declared by Damascus ally Russia.

French cheer police, reviving Charlie spirit
French police officers on Saturday demonstrated for the fifth night in a row to protest mounting attacks on officers. Photo: Thomas Samson / AFP

Angry French police have taken to the streets for five nights in a row -- and Parisians have started to cheer them on, reviving scenes last seen following the Charlie Hebdo attacks in 2015.

Scarlett Johansson turns popcorn girl in Paris
US actress Scarlett Johansson greets customers at the Yummy Pop gourmet popcorn shop in the Marais district of Paris. Photo: Benjamin Cremel / AFP

Hollywood superstar Scarlett Johansson swapped the red carpet for a turn behind the counter at her new popcorn shop in Paris on Saturday.

US couple donates huge art collection to Paris
Marlene (centre) and Spencer (right) are donating their collection ‘for the benefit of art lovers’. Photo: Thomas Samson / AFP

A Texan couple who discovered their love for art during a trip to Paris in the 1970s are to donate the multi-million dollar collection they have amassed since to the French capital.

France to clear 'Jungle' migrant camp Monday
Migrants will be bussed from the camp to some 300 temporary accommodation centres around France. Photo: Denis Charlet/ AFP

The "Jungle" migrant camp on France's northern coast will be cleared of its residents on Monday before being demolished, authorities said Friday.

How life for expats in France has changed over the years
A market in Eymet, southwestern France. Photo: AFP

Foreigners in France explain how life has changed over the years.

London calling for Calais youths, but only a chosen few
Photo: AFP

Dozens of Calais minors are still hanging their hopes on help from the UK, but not all will be so lucky.

17 different ways to talk about sex in French
Photo: Helga Weber/Flickr

Fancy a quick run with the one-legged man?

Yikes! This is what a rat-infested French jail looks like
Photo: YouTube/France Bleu TV.

This video is not for sufferers of ratophobia (or musophobia as the condition is officially called).

Sponsored Article
How to vote absentee from abroad in the US elections
Why Toulouse is THE place to be in France right now
Sponsored Article
Last chance to vote absentee in the US elections
Video: New homage to Paris shows the 'real side' of city
The 'most dangerous' animals you can find in France
Sponsored Article
How to vote absentee from abroad in the US elections
Swap London fogs for Paris frogs: France woos the Brits
Anger after presenter kisses woman's breasts on live TV
Is France finally set for a cold winter this year?
IN PICS: The story of the 'ghost Metro stations' of Paris
How to make France's 'most-loved' dish: Magret de Canard
Welcome to the flipside: 'I'm not living the dream in France'
Do the French really still eat frogs' legs?
French 'delicacies' foreigners really find hard to stomach
French are the 'world's most pessimistic' about the future
Why the French should not be gloomy about the future
This is the most useful French lesson you will ever have. How to get angry
Why is there a giant clitoris in a field in southern France?
French pastry wars: Pain au chocolat versus chocolatine
Countdown: The ten dishes the French love the most
Expats or immigrants in France: Is there a difference?
How the French reinvented dozens of English words
The ups and downs of being both French and English
How Brexit vote has changed life for expats in France
Twelve French insults we'd love to have in English
What's on in France: Ten of the best events in October
jobs available