Ratings agency Fitch provided some relief to the French government on Tuesday when it said the country looked unlikely to be downgraded from its prized triple-A rating in 2012.

"/> Ratings agency Fitch provided some relief to the French government on Tuesday when it said the country looked unlikely to be downgraded from its prized triple-A rating in 2012.

" />
SHARE
COPY LINK

ECONOMY

Fitch reassures France on AAA rating

Ratings agency Fitch provided some relief to the French government on Tuesday when it said the country looked unlikely to be downgraded from its prized triple-A rating in 2012.

“In the absence of important shocks that could be linked to a strong worsening of the situation in the eurozone, Fitch does not foresee modifying its negative outlook before 2013,” a spokesman said.

The news sent stock prices in Paris higher with the CAC40 index closing up 2.66 percent.

The news marked a positive shift in tone after Fitch changed its outlook for France in December from “stable” to “negative.”

There was worse news for Italy as the agency said it could see its credit rating cut this month.

“Italy is the front line of this crisis,” said David Riley, the head of global sovereign ratings at Fitch. 

France has embarked on a round of budget cuts to try to preserve its AAA-rating while ministers have continued to insist that a rating cut would be unwelcome but manageable. 

President Nicolas Sarkozy said in December that a cut would be “another difficulty, but not an insurmountable one.”

Meanwhile, the head of the French central bank provoked cross-channel clashes later in the month when he suggested that Britain should be downgraded first.

“They should start by degrading the United Kingdom, which has greater deficits, as much debt, more inflation and less growth than us,” Christian Noyer said.

The remarks caused a brief volley of insults before calm was restored.

twitter.com/matthew_warren

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

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.

SHOW COMMENTS