French credit rating cut by S&P again - Philadelphia News, Weather and Sports from WTXF FOX 29

French credit rating cut by S&P again

Posted: Updated:

PARIS (AP) — France's principal credit rating was downgraded again Friday by Standard & Poor's, which said the country has limited ability to get its public finances in shape and make its economy more competitive.

The agency lowered France's long-term foreign and local currency sovereign credit ratings one notch to AA from AA+. However, the outlook for the rating is "stable," meaning no further changes are expected in the near term.

Since taking office in 2012, President Francois Hollande has passed some economic reforms, such as making the labor market more flexible and changing the pension system, but many economists say the changes are too incremental to improve the situation.

S&P said those reforms would likely be "insufficient to significantly unlock France's economic growth potential." France recently saw a small rebound in growth after months of stagnation, but real sustained growth is expected to be slow in returning.

And the ratings agency added that high unemployment — it is currently 11.1 percent — will make more reforms nearly impossible.

Without reforms, it can be difficult to significantly reduce spending, and S&P said France has already maxed out its ability to raise taxes. That means the government will also struggle to improve its public finances, even more so as the agency expects French unemployment to remain above 10 percent until 2016.

"The overall effect appears to us to leave France with less economic flexibility than other highly-rates eurozone members," the agency said.

Market reaction was muted, despite the surprise move, possibly because repeated downgrades have taken the sting out. S&P was the first agency to strip France of its top AAA rating last year. The other two major ratings agencies, Moody's and Fitch, have since followed suit.

The CAC-40 stock index was down 0.8 percent, in line with declines in other European indexes, while the yield on the country's 10-year bond was up a bare 0.03 percentage point at 2.19 percent — a historically low rate.

French Finance Minister Pierre Moscovici said he regretted S&P's decision but emphasized that France's credit rating remained among the highest in the European Union and the world.

"I deplore certain judgments that, I think, are inexact criticisms," Moscovici told France Info radio. "They underestimate the ability of France to transform itself, to right itself."

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  • Your MoneyMore>>

  • Caesars enters New York casino competition

    Caesars enters New York casino competition

    Tuesday, April 22 2014 10:52 PM EDT2014-04-23 02:52:22 GMT
    Caesars Entertainment entered the competition to open a casino in upstate New York on Tuesday with a proposal to build a $750 million complex 50 miles north of New York City. The complex would include a casino, a hotel and a meeting space and would be located in Woodbury, in Orange County. The Las Vegas-based Caesars, which operates 52 casinos around the world, has submitted a $1 million casino license application fee to state gambling regulators.
    Caesars Entertainment entered the competition to open a casino in upstate New York on Tuesday with a proposal to build a $750 million complex 50 miles north of New York City. The complex would include a casino, a hotel and a meeting space and would be located in Woodbury, in Orange County. The Las Vegas-based Caesars, which operates 52 casinos around the world, has submitted a $1 million casino license application fee to state gambling regulators.
  • Airbnb fights NY attorney general's subpoena

    Airbnb fights NY attorney general's subpoena

    Tuesday, April 22 2014 7:06 PM EDT2014-04-22 23:06:24 GMT
    Renting out someone's apartment is an easy way to get an inexpensive place to stay if you're a tourist, and cheaper and more convenient than most hotels. But now the government is stepping in and trying to get a handle on a booming business that may not be playing by the rules. State Attorney General Eric Schneiderman is squaring off in court with multi-million dollar Internet company Airbnb.
    Renting out someone's apartment is an easy way to get an inexpensive place to stay if you're a tourist, and cheaper and more convenient than most hotels. But now the government is stepping in and trying to get a handle on a booming business that may not be playing by the rules. State Attorney General Eric Schneiderman is squaring off in court with multi-million dollar Internet company Airbnb.
  • McDonald's profit slips amid weak sales

    McDonald's profit slips amid weak sales

    Tuesday, April 22 2014 8:24 AM EDT2014-04-22 12:24:13 GMT
    McDonald's reported a lower profit for the first quarter as the world's biggest hamburger chain saw global sales remain weak.The Oak Brook, Ill.-based company said global sales edged up 0.5 percent at established restaurants.  In the U.S., the figure fell 1.7 percent as customer traffic declined.
    McDonald's reported a lower profit for the first quarter as the world's biggest hamburger chain saw global sales remain weak.The Oak Brook, Ill.-based company said global sales edged up 0.5 percent at established restaurants.  In the U.S., the figure fell 1.7 percent as customer traffic declined.
Powered by WorldNow

WTXF-TV
330 Market Street
Philadelphia, PA 19106-2796

Phone: (215) 925-2929
Fax: (215) 982-5494

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices