Paris, France (4E) – Fitch Ratings downgraded France’s credit rating, joining other two ratings firms to make such a move, citing the gradual decline in general government debt over the long term.
Fitch lowered the rating of the euro zone’s second-largest economy by one level from the top-level triple-A to double-A-plus, while the outlook is stable.
The credit-ratings firm said conditions in France’s finances remain bleak, adding that debt would continue its upward trend and at a faster rate than it previously thought, and predicted that the economy would contract in 2013 after stagnating last year. Fitch also said another cause of concern is the country’s 10.9 percent unemployment rate, which is a 15-year-high.
Despite being stripped of its triple-A status, the rating firm said France’s credit profile remains “extremely strong” in its new rating, adding that the country’s rating was bolstered by its political stability and wealthy and diversified economy.
Fitch also outlined in its Friday report the cause of France’s economic problems: strict laws on labor and trade of goods and services, weak corporate profitability and deterioration in competitiveness.
The pace of recovery is expected to be slow and the French economy could potentially grow at a rate of just 1.5 percent in the long term, Fitch said.
Rival credit firms Standard & Poor’s Ratings Services and Moody’s Investors Service rate France at double-A-plus and Aa1 and, respectively, which are the equivalent of Fitch’s new rating.
There are no comments yet. Why not be the first to speak your mind.