The rating agency Fitch lowered, Friday, April 28, the French rating, citing the strong social tensions at work around the pension reform.

"The political impasse and social movements (sometimes violent) constitute a risk for Macron's reform program," the rating agency wrote in a statement that announced the downgrading of the French rating by one notch, to "AA-", against "AA" previously.

Six weeks ago, the government definitively adopted its pension reform project providing for a postponement of the legal age from 62 to 64 years, thanks to the support of Article 49-3 of the Constitution which allows a text to pass without a vote in Parliament.

" READ ALSO What does the final text of the pension reform contain?

This decision led to a sharp hardening of the protest, and several days of violent demonstrations throughout the country, recalling the episode of the yellow vests from 2018.

"This decision has led to protests and strikes across the country and will likely strengthen radical and anti-establishment forces," said Fitch, which had attached a negative outlook to its previous rating, the risk of a downgrade.

The current deadlock could also "create pressure for a more expansionary fiscal policy or a reversal of previous reforms," said Fitch, which this time accompanied its "AA-" rating with a stable outlook.

Fitch is the first of the three main international rating agencies to downgrade the French rating since the adoption of the pension reform.

Expected for an update of its rating last Friday, the agency Moody's has finally not carried out a rating action, while the agency S&P Global, which currently gives the rating of "AA" to the France with a negative outlook, is to publish its conclusions on June 2.

Regrets of the Minister of the Economy

Economy and Finance Minister Bruno Le Maire regretted Friday in a statement the "pessimistic assessment" of Fitch, saying that the rating agency "underestimates the consequences of reforms", including that of pensions.

In its conclusions published on Friday, Fitch evokes "significant budget deficits and modest progress" in reducing them.

After reaching 4.7% in 2022, the French public deficit is expected to rise slightly this year to 4.9% before gradually declining from 2024, anticipates the government in its stability program published in recent days, which expects a return to the European budgetary nails in 2027.

Fitch expects a deficit of 5% this year and 4.7% next year.

Debt reduction should accelerate according to the government, with debt representing 108.3% of GDP in 2027, 4 points less than previously envisaged but still far from the European target of 60%. It stood at 111.6% of GDP at the end of 2022.

Fitch also expects growth to be less robust than expected in its previous November forecast. This year it would be 0.8% against 1.1% previously anticipated, and 1.3% in 2024, against 1.9% imagined in the last forecasts.

The government expects 1% growth this year.

With AFP

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