France: lower credit rating due to pension reform?

Fitch rating agency on Friday downgraded France’s credit rating from AA (very high) to AA- (outlook stable). The scale ranges from AAA to D. The agency justified the decision pointing, among other things, to the strong resistance to Macron’s reform plans, which it believes could hinder progress toward consolidation of the country’s finances.

Les Echos (FR) /

State coffers will be filled

Les Echos finds the explanations for the downgrade unconvincing:

“Clearly the government has used up most of its political capital in the battle over pensions. But to conclude that France is at an impasse seems insufficient, or at the very least premature, justification for downgrading France’s credit rating by one notch. Especially since — it should be recalled — the pension reform will allow the state’s financial situation to improve. By 2027, 17 billion euros in additional revenues — direct or indirect through tax and contribution increases — are expected, according to the stability programme that Paris has just sent to Brussels.”

François Vidal
La Croix (FR) /

Reprimand for Macron’s methods

Fitch is making it clear to Paris that it can’t simply impose reforms against the will of the people, stresses Dominique Greiner, editor-in-chief of La Croix:

“The government could even profit from France’s credit rating downgrade by using it to justify the appropriateness of its actions aimed at re-balancing the national budget. But Fitch’s decision also testifies to the financial markets’ concern about the way the government has handled the social discontent triggered by the pension reform. Adopt structural reforms, yes, but not just any old way: it’s as if the rating agencies were professing a preference for a more social brand of democracy!”

Dominique Greiner