“I have to tell you, in reality the main reason for this downgrade is that we saved the French economy,” Le Maire said in an interview with Le Parisien published right after the ratings decision was announced. The downgrade “will have no impact on the daily life of the French,” he said.
“This essential spending has obviously increased our debt, but also allowed us to save our businesses and jobs,” Le Maire added.
While lauding past French labor-market reforms undertaken under French President Emmanuel Macron, the rating agency expressed doubts on the government’s ability to make further reforms without an absolute majority in the parliament.
“We believe political fragmentation adds to uncertainty regarding the government’s ability to continue implementing policies that increase economic growth potential and address budgetary imbalances,” S&P wrote. The budget deficit is forecast to remain above 3 percent of gross domestic product into 2027, the agency said.
The rating decision came a day after Le Maire celebrated his record seven-year tenure at the economy ministry by sharing some charcuterie and wine with his closest allies on Thursday.
After years of big spending to face the economic crises caused by the pandemic, high energy prices and Russia’s invasion of Ukraine, France is now tightening the belt. Le Maire’s ministry in April announced spending cuts of €10 billion for the second time this year.
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