Fitch lowers debt rating of France to AA

The financial rating agency Fitch Ratings on Friday lowered the debt rating of France to ‘AA +’ to ‘AA’ with a stable outlook due to their tax situation.

Fitch called “weak” economic prospects of the country and stated that weigh on the consolidation of public finances and stabilizing the debt / GDP ratio.

“The French economy should grow unless the countries of the euro area average for the first time in four years,” said the agency.
The agency estimates that structural reform programs of the government “does not appear to be sufficient to reverse the negative trends that weigh on long-term growth and competitiveness”.

Fitch expects growth of Gross Domestic Product (GDP) French 0.4% in 2014 and 0.8% in 2015, when “the depreciation of the euro and lower oil prices will sustain some growth.”

Despite the savings of 3,600 million announced by the government, which wants to lower the deficit in 2015 to 4.1% of GDP instead of 4.3% originally planned, “that will not be enough to change projections Fitch the dynamics of the public debt of France, “it said.

Fitch also noted that 4.1% of GDP, the deficit in 2015, “does not show improvement compared to 2013”. The government projects a deficit of 4.4% for 2014, instead of the 3.8% forecast in April.

“These latest deviations in budgetary targets (…) weaken fiscal credibility,” said Fitch, adding that “it is the second time since late 2012 that the French government delays the goal of reaching a deficit of 3%,” which calls for the European Union. The French government postponed this goal by 2017.