The largest ratings agency, Moody's, threatened to follow its rival Standard & Poor's by downgrading France from its triple-A rating, along with the UK and Austria.

"/> The largest ratings agency, Moody's, threatened to follow its rival Standard & Poor's by downgrading France from its triple-A rating, along with the UK and Austria.

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ECONOMY

Moody’s threatens France with downgrade

The largest ratings agency, Moody's, threatened to follow its rival Standard & Poor's by downgrading France from its triple-A rating, along with the UK and Austria.

The loss of the AAA rating by Standard & Poor’s a month ago was a blow for President Sarkozy as he prepares to seek re-election in April.

At the time, the president reacted to the downgrade by Standard & Poor’s by making reference to Moody’s greater importance.

“On Monday, another agency, twice as important, said the opposite,” he said.

The other agency was Moody’s, which had said it was keeping France on a “stable” outlook.

However, on Monday the same agency changed that outlook to “negative”, meaning the risk of downgrade was greater.

There may have been some cheer that, on this occasion, France was joined by the United Kingdom in getting the downgrade warning.

In December, a war of words started after the head of the French central bank claimed the UK should be downgraded before France.

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

Finance minister François Baroin joined in the attack by saying “the economic situation in Great Britain is very worrying” and “we prefer being French rather than British on the economic front at the moment.”

Baroin reacted to the latest downgrade threat on Monday saying the government had “noted” the decision.

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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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