The chief economist at ratings agency Standard & Poor's has told Le Parisien newspaper that investors are already treating France as if it had a BBB rating.

"/> The chief economist at ratings agency Standard & Poor's has told Le Parisien newspaper that investors are already treating France as if it had a BBB rating.

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ECONOMY

Ratings agency: France ‘treated like BBB’ country

The chief economist at ratings agency Standard & Poor's has told Le Parisien newspaper that investors are already treating France as if it had a BBB rating.

Ratings agency: France 'treated like BBB' country

The comment was lent some credibility by a bond auction on Thursday in which France was forced to pay an interest rate of 3.29 percent. This is much higher than the 1.93 percent paid by AAA-rated Germany.

Jean-Michel Six, chief European economist, and Carol Sirou, the president of Standard & Poor’s in France, gave a rare interview with the daily newspaper in which they tried to deflect some of the criticism they and other ratings agencies have received in France.

France and several other EU countries were put on notice late in 2011 that their AAA ratings were under threat as the eurozone debt crisis continues.

A prominent union leader said President Nicolas Sarkozy was the “hostage” of the ratings agencies in an interview on Thursday

Since receiving its warning, the French government has made cuts of €20 billion ($25.6 billion) in an attempt to bring its public deficit down to 4.5 percent of GDP from 5.7 in 2011.

More recently, ministers have been trying to downplay the impact a downgrade might have.

“It would be another difficulty, but not an insurmountable one,” the president told Le Monde newspaper in December.

“If they decide to take it away from us we’ll face the situation with sang froid and calm.”

The boss of Standard and Poor’s denied claims that any downgrade would be an attempt to sabotage France or the eurozone.

“If France loses its AAA, commentators will claim an American plot or a sabotage of Europe. It’s pure fantasy,” she said.

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ECONOMY

Sweden’s new right-wing govt slashes development aid

Sweden, one of the world's biggest international donors, is planning drastic aid cuts in the coming years, the country's new right-wing government said in its budget bill presented on Tuesday.

Sweden's new right-wing govt slashes development aid

Prime Minister Ulf Kristersson’s government said it planned to reduce the country’s international aid by 7.3 billion kronor ($673 million) in 2023, and by another 2.2 billion kronor in 2024.

That is around a 15-percent reduction from what had been planned by the previous left-wing government and means Sweden will abandon its foreign aid target of 1 percent of gross national income.

International aid for refugees will be capped at a maximum of eight percent of its aid, and will also be reduced.

According to the specialised site Donor Tracker, Sweden was the world’s eighth-biggest international aid donor in terms of absolute value last year, and the third-biggest in proportion to the size of its economy, donating 0.92 percent of its gross national income, behind Luxembourg and Norway.

The new government, which is backed for the first time by the anti-immigration Sweden Democrats, had announced in its government programme last month that it would be cutting foreign aid.

Since 1975, Stockholm has gone further than the UN’s recommendation of donating at least 0.7 percent of its wealth to development aid.

Despite its growth forecast being revised downwards — the economy is expected to shrink by 0.4 percent next year and grow by 2 percent in 2024 — the 2023 budget forecasts a surplus of 0.7 percent of gross domestic product.

It calls for an additional 40 billion kronor in spending, with rising envelopes for crime fighting and the building of new nuclear reactors, as well as a reduction in taxes on petrol and an increase in the defence budget.

The new government is a minority coalition made up of Kristersson’s conservative Moderates, the Christian Democrats and the Liberal party, backed in parliament by their key ally the Sweden Democrats to give them a majority.

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