Fitch Ratings downgraded France’s rating, citing increased social tensions in connection with pension reform.
“Political stalemate and sometimes violent social movements pose a threat to French President Emmanuel Macron’s reform agenda,” the agency said in a statement announcing France’s rating downgrade by one notch, “AA negative” – AA (versus AA) .
Six weeks ago, the French government finally passed its pension reform project, which would raise the age of majority from 62 to 64.
Based on Article 49-3 of the Constitution, the text was adopted without a vote in Parliament. The decision led to an escalation in protests and days of violent demonstrations across the country.
“This decision has sparked protests and strikes across the country and is likely to strengthen radical and anti-establishment forces,” said Fitch Ratings, which gave its previous rating a negative outlook.
She added that the current stalemate could “lead to the need for more expansive fiscal policy or the reversal of past reforms.”
In response to Fitch’s statement, French Finance Minister Bruno Le Maire said today, Saturday, that France will continue to “carry out structural reforms.”
“I think the facts belie Fitch’s assessment. We can carry out structural reforms in the country,” he added, specifically mentioning the reform of unemployment insurance and the pension system.
“We will continue to carry out structural reforms in the country,” Le Maire said.
Fitch was the first of the three largest international credit rating agencies to downgrade France’s rating after the adoption of the pension reform.