Fitch Ratings agency announced in a statement downgrading France’s credit rating to AA-, while maintaining Morocco’s rating at “BB+” with a stable outlook. The decision on France comes against the backdrop of intense social tension over pension reform.
In what appears to be a warning, Fitch Ratings downgraded France, noting severe social tension on pension reform. It maintained Morocco’s rating at “BB+” with a stable outlook.
And the agency’s statement announcing the downgrade of France’s rating by one degree, “AA negative” -AA (versus AA previously), included that “political stalemate and (sometimes violent) social movements pose a threat to (French President Emmanuel) Macron’s reform program.”
Six weeks ago, the French government finally adopted its project to reform the retirement system, which provides for raising the legal age from 62 to 64 years. On the basis of Article 49-3 of the Constitution, the text was adopted without a vote in Parliament.
This decision led to an escalation of protests and days of violent demonstrations across the country.
“This decision sparked protests and strikes across the country and is likely to strengthen radical and anti-establishment forces,” said Fitch Ratings, which attached its previous rating to a negative outlook.
She added that the current impasse could “lead to pressure for a more expansionary fiscal policy or the overturning of previous reforms.”
In response to Fitch’s announcement, French Finance Minister Bruno Le Maire told Agence France-Presse on Saturday that France would continue to “pass structural reforms.” He added, “I think that the facts invalidate the assessment of Fitch Ratings. We are able to pass structural reforms to the country,” and mentioned in particular the reform of unemployment insurance and the pension system.
Fitch is the first of three major international credit rating agencies to downgrade France since the adoption of the pension reform.