France suffers ratings downgrade

Standard & Poor’s has cut France’s credit rating to AA, its second downgrade in two years, as the agency said the government was struggling to boost economic growth.

“The downgrade reflects our view that the French government’s current approach to budgetary and structural reforms to taxation, as well as to product, services, and labor markets, is unlikely to substantially raise France’s medium-term growth prospects,” the agency said in a statement.

The country’s sovereign credit rating was previously rated one notch higher by the S&P, at AA-. This move will potentially make borrowing for the country more expensive, because it is seen to be more likely to default on its debts.

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But French finance minister hit back at the ratings agency and insisted that the downgrade “reaffirms the determination of the entire government to follow the path already laid out to reduce the public deficit, restore competitiveness and support economic growth and employment”.