France and Standard & Poor’s downgrade its rating, and now the debt scares Macron

Excessive deficits and debt booms, accompanied by weak growth and stagnant employment. Do you think we’re talking about Italy as usual? mistake. The bleak picture above is now more relevant to our French cousins ​​than to the rest of us. So much so that on May 31, while Moody’s affirmed Italy’s Baa3 rating, Standard & Poor’s downgraded France’s rating by one notch, from AA to AA-. Excluding various abbreviations used in the report cards, Paris fell from third to fourth place on the “investment grade” scale, while Rome remained in ninth place (10th according to Moody’s). A short while ago, Fitch downgraded France’s rating to the same level.

For President Macron – who would have done without this news a week before the European elections – the deficit was a prisoner: “The reduction reflects expectations that – as Standard & Poor’s wrote – contrary to our previous forecasts, French public debt as a share of GDP will rise.” . “The increase is due to a larger-than-expected budget deficit during the period 2023-2027.” But the higher-than-expected deficit (the forecast for 2023 is 5.1%, one point higher than the estimate) is nothing more than a low point for an economy that shows different, and even more pronounced, weaknesses when compared. With our economy.

At the GDP level, France’s growth in the first quarter was lower than Italy’s (0.2% versus 0.3%); In the last three quarters, the gap doubled (0.4 versus 0.9%); At the cumulative level, since the last quarter before the pandemic of 2019, Italy has achieved 4.6%, and France 2.2. Upstream, there is unemployment, which stopped falling in 2023, so much so that last March Italy achieved a historic overshoot, recording a rate of 7.2% lower than France’s 7.3%.

If we then look at the debt, as Marco Fortes wrote in Il Sole, between 2020 and 2023, net of interest, the Transalpine debt has grown by 551 billion against the 170 billion accumulated by the Italian Republic. So much so that the French debt in absolute terms has already exceeded 3 thousand billion (more than 3100) while our debt is still less than (2900 billion).

Of course, when it comes to GDP, Paris always performs better, at 110% compared to Italy’s 138%. But the dynamics we have seen, especially the deficit, do not bode well. How S&P was credited with a downgrade. Bad joke on Macron.