Moody’s Is a Bit Late with Downgrading of France Rating
Moody's, an international credit rating agency, downgraded France's government bond rating by one level to AA1 from AAA. The outlook remains negative.
I would not consider the downgrading of the France's credit rating and at the same time depriving the second large economy in Europe of the highest rating to be the signal of the new crisis round in the euro-zone. It has been known for a long time that the financial system of France has certain problems, in contrast to Germany, Austria, Switzerland, and the Netherlands.
Moreover, it can be said that Moody's agency is a bit late with the downgrading. Now the appraisal of the policy carried out by the new French government which came to power after the elections, is adequate, because a number of decisions have been adopted recently which contradict to the rigid anti-crisis policy carried out by Nicolas Sarkozy and Angela Merkel.
France can face the situation when it will have to review its economic policy. And that refers not to some slump in the current budget expenses – the budget deficit is within the acceptable limits. It is more likely to refer to the policy which does not facilitate the economy restoration and its transit to growth. While the countries in the South of Europe consider the problem of consolidation and reduction of the budget deficit extremely important, economic growth is more important for the French economy.
S.M. Drobyshevsky – Doctor of Science (economics), Director of Center for Macroeconomics and Finance