In response to Fitch’s announcement, French Finance Minister Bruno Le Maire told AFP on Saturday that France would continue to “pass structural reforms”.
In what appears to be a warning, Fitch Ratings downgraded France, citing heightened social tension around pension reform.
“Political stalemate and (sometimes violent) social movements pose a threat to (French President Emmanuel) Macron’s reform programme,” the agency wrote in a statement announcing a one-notch downgrade of France’s rating, “AA Negative” -AA (versus AA).
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.
‘Continuing reforms’
“This decision has sparked protests and strikes across the country and is likely to strengthen radical and anti-establishment forces,” Fitch Ratings, which attached its previous rating to a negative outlook, said.
She added that the current impasse could “lead to pressure for a more expansionary fiscal policy or to overturn past reforms”.
In response to Fitch’s announcement, French Finance Minister Bruno Le Maire told AFP on Saturday that France would continue to “pass structural reforms.”
“I think the facts invalidate Fitch’s assessment. We are able to pass structural reforms to the country,” he added, notably mentioning the reform of unemployment insurance and the pension system.
“We will continue to pass the country’s structural reforms,” Le Maire said.
Fitch is the first of three major international credit rating agencies to downgrade France since the adoption of the pension reform.
