France’s Macron has work cut out after downgrade

Chris Papadopoullos
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Macron wants to woo investors this week
FRENCH economy minister Emmanuel Macron will face a bigger challenge than expected this week when he attempts to persuade British investors to back France after the country’s credit rating was downgraded by Moody’s.

Macron is holding an exclusive seminar entitled “Why invest in France” on Thursday before delivering a speech at the London School of Economics that afternoon.

Moody’s downgraded French government debt from Aa1 to Aa2, one notch lower than the UK’s.

The ratings agency said that it now expects France’s weak growth outlook to extend through the remainder of the decade. It sees growth maxing out at a mere 1.5 per cent annual rate over the next few years.

Political and institutional constraints will also hinder the Eurozone’s second largest economy from slashing its debt pile.

The French government has faced considerable opposition to its reform proposals this year.

Moody’s said: “Taken together, low growth and institutional and political challenges to reforms make it unlikely that we will see a material reduction in the government’s high debt burden over the rest of this decade, which means that it will remain well above the debt burdens of Aa1-rated peers.”

Despite the downgrade, Moody’s said France’s credit rating remains “extremely high”.

A wealthy and diversified economy as well as favourable demographic trends were cited by Moody’s as reasons to be optimistic on the country’s ability to repay its debts.

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