France’s finance minister said yesterday that growth next year may be lower than estimated, a day after a leading agency warned it may put the country’s cherished “triple A” rating on notice for a possible downgrade.
Ahead of the debate for next year’s budget in parliament, French Minister of Economy, Finance and Industry Francois Baroin warned on France 2 television that the growth estimate of 1.5 percent for next year was “probably too high.”
He blamed the risk of a global slowdown, which he said could be “very vast” and “severe.”
Baroin said the government would “put everything in place to avoid falling into a recession ... and to protect our country from a downgrade” of its “triple A” rating, a day after Moody’s said it was assessing the country.
However, Baroin said he would not change the forecast just yet, especially in the run-up to the meeting of eurozone leaders in Brussels on Sunday and the meeting of G20 leaders early next month.
“If we are capable in the next two weeks of ... measures powerful enough to stop speculation so that we can make people understand that we will not let 60 years of European construction collapse ... then I will have no worries, there will be growth in 2012 and 1.5 percent will be achieved,” he said.
Being the eurozone’s second-largest economy, France could well have a big bill to pay for sorting out Europe’s debt crisis.
It’s in that context that Moody’s said it would be studying whether to put France’s rating on notice for a possible downgrade over the next three months. It said it would focus in on the government’s ability to implement its fiscal and economic reforms, as well as any other potential adverse economic or financial market developments.It said France has much less room for maneuver in terms if stretching its balance sheet than it had in 2008.
“France may face a number of challenges in the coming months — for example, the possible need to provide additional support to other European sovereigns or to its own banking system, which could give rise to significant new liabilities for the government’s balance sheet,” Moody’s said.
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