Sarkozy plays down effect of AAA loss
President Nicolas Sarkozy appeared on Monday to accept that France is facing a downgrade of its triple-A credit rating, when he declared that he would overcome this challenge to his policy.
"It would be another difficulty, but not an insurmountable one," he said in an interview with the daily Le Monde. "If they decide to take it away from us we'll face the situation with sang froid and calm."
Sarkozy, who is facing a tough re-election battle next year, has staked much of of his credibility on preserving France's top debt rating.
But markets have not been convinced that the EU's latest "fiscal pact" will be strong enough or quick enough to prevent the risk of a sovereign default in the eurozone, which would in turn damage French banks.
Two agencies, Standard & Poor's and Moody's, have warned that they are putting France and its EU partner's debt under scrutiny, and markets see Paris as likely to drop one or even two rungs on the ratings ladder.
"What counts more than anything is the credibility of our economic policy and our determined strategy to reduce spending. We will scrupulously honour all the engagements that we have made," Sarkozy said.
The French leader's guarded admission follows those of several senior French officials who, over the weekend, appeared to be preparing the ground for the increasing likelihood of a credit downgrade.