Wednesday

2nd Dec 2020

France: Agencies should downgrade 'Greece-like' UK

Relations between France and the UK plumbed new depths on Thursday (15 December) when the head of the French central bank said ratings agencies should downgrade the UK before France and the country’s finance minister compared the British economy to that of Greece.

"A downgrade does not strike me as justified based on economic fundamentals,” French central bank chief Christian Noyer said in a interview with a French local newspaper.

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“Or if it is they should begin by downgrading the UK, which has a bigger deficit, as much debt, weaker growth and where bank lending is collapsing."

The remark came in the wake of a warning from ratings agency Standard & Poor’s that it may downgrade France. On 5 December, the agency said that it was placing its triple-A sovereign rating on ‘credit watch’ with ‘negative implications’.

The agency made no mention of the UK, which lies outside the eurozone.

The French president, who has placed the battle against such a downgrade at the heart of his strategy for dealing with the eurozone crisis, now appears as a patient resigned to its fate.

Earlier this week, French leader Nicolas Sarkozy told Le Monde that a downgrade would not be “insurmountable".

His colleagues however appear want to go down fighting, lashing out at their old rival, 'perfidious Albion.'

Speaking to the National Assembly, French finance minister Francois Baroin attacked London for vetoing a new EU treaty at the level of its 27 member states, saying a new fiscal compact had been backed by all, “with the singular, now solitary, exception of Great Britain, which history will remember as marginalised.”

"Great Britain is in a very difficult economic situation, a deficit close to the level of Greece, debt equivalent to our own, much higher inflation prospects and growth forecasts well under the eurozone average," he added.

Responding to the remarks, a spokesman for the UK prime minister said that the country has a plan for dealing with its debt levels.

Meanwhile on Thursday evening, another ratings agency, this time Fitch, whose parent company is French, slashed the credit assessment on two of France’s biggest banks, BNP Paribas and Societe Generale, alongside that of some of the world’s powerhouse financial institutions: Bank of America, Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, and Morgan Stanley.

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