• France's news in English

French efforts to cut debt are not enough: Moody's

AFP/The Local · 5 Aug 2014, 08:49

Published: 05 Aug 2014 08:49 GMT+02:00

Facebook Twitter Google+ reddit

France's stated plan to cut spending and taxes to trim €18 billion ($24 billion) from the deficit this year and €50 billion from 2015 to 2017 is "broadly positive" for competitiveness, Moody's said in a statement.

But the ambition of the plan, the fact most of the expenditure cuts are unspecified, the political unpopularity of reduced healthcare spending, and weak growth all underline the "significant implementation risk," it said.

That goes to supporting Moody's negative outlook for France's sovereign rating, which it currently puts at Aa1, it added.

Moody’s was however sceptical about the government’s ability to implement these reforms, saying the task would be even “more difficult in a context of sluggish growth”.

“If the new guidelines adopted by the French government seem generally favourable to the overall competitiveness of the country, the risk associated with the implementation of the program is significant,” Moody’s said, citing “political tensions".

Moody's has downgraded its own forecasts for the French economy. It now expects growth of 0.6% this year and 1.3% in 2015, compared to previous predictions of 1.0% and 1.5% respectively.

There are also doubts at a European level whether France can stick to its targets of cutting its deficit.

The European Union in June last year agreed to give France an extra two years, until 2015, to bring its deficit under the EU-agreed ceiling of 3.0 percent of economic output.

But strong doubts remain over whether the French government will be able to make good on its promise, as it struggles to balance its left-wing agenda and meet its commitments to the European Union.

Story continues below…

Earlier this year Finance Minister Michel Sapin was forced to deny that that Paris were hoping to persuade the EU to give them more time.

"I have always said that I have not asked for a delay," Michel Sapin told AFP in a telephone interview, as the government spokesman said that deficit control was a condition for growth.

Britain, which also has an Aa1 rating and similar debt and deficit figures, has a stable outlook because of "a stronger track record of fiscal consolidation" after more than three years of spending cuts, Moody's noted.

AFP/The Local (ben.mcpartland@thelocal.com)

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Revealed: The ten most stolen cars in France
A Smart car in Paris. Photo: JR_Paris/Flickr

Thieves in France are getting a taste for luxury cars, it seems.

Analysis - France migrant crisis
Migrant crisis won't end with Calais 'Jungle' closure
All Photos: AFP

The Jungle camp may be being cleared but this won't be the end of the migrant crisis in France.

Brad Pitt and Angelina Jolie 'to sell their French chateau'
All photos: AFP

Want to live where Brangelina got married?

How Paris is rapidly becoming Europe's 'City of Innovation'
Photo: AFP

If you want to start a company then Paris is the place to do it, it seems.

'Jungle' clearance: Migrants begin to leave Calais camp
All photos: AFP

The "Jungle" clearance is underway.

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.

Parisians cheer on protesting French police
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.

The must-see French films of the millennium - Part One
Sponsored Article
Last chance to vote absentee in the US elections
How life for expats in France has changed over the years
Why Toulouse is THE place to be in France right now
Video: New homage to Paris shows the 'real side' of city
The 'most dangerous' animals you can find in France
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
jobs available