France's debt: why the country keeps its credit rating.

Ogo! We can breathe a sigh of relief in Bercy: on Friday evening, December 1, S&P Global Ratings announced that France retains its AA rating... but still with a negative outlook. Fitch remains the only rating agency to give France a lower rating (AA-).

In recent days, concerns have arisen. Given its fiscal performance (debt is set to reach around 110% of GDP by 2023 and a deficit of 4.9% of GDP), France is actually rated less stringently than many other countries in its category. "It would be logical for them to put us in the right category if they strictly adhere to these criteria," Bercy said during the week.

Reforms in France are welcomed by S&P

K' 'Fortunately for our country, the assessment of states does not depend solely on hard quantitative indicators, but also on a number of economic and political considerations that allow France's poor performance to be rated higher than it should be. First, S&P foresees a coming improvement in our public finances, although it will be far from brilliant.

In its communiqué, the rating agency welcomes the introduction of reforms, including pension and labor market reforms (France Labor, unemployment benefits...), which they believe should improve our public finances.

The election of Bruno Lemaire.

"Economy Minister Bruno Lemaire is also multiplying with enduring statements such as the latest announcements'' 'regarding savings on public real estate or the desire to review the unemployment insurance system, and projects have been launched to reduce public spending,' emphasizes Norbert Gaillard, independent economist and sovereign risk specialist.

Another positive for France is that its debt is valued by investors because it still inspires confidence: they particularly note the diversity of the French economy or the state's ability to raise taxes. "In addition, the AFT schedule is predictable, the debt is liquid and France has a good debt management method," emphasizes Patrick' 'Artus, economic consultant at Natixis.

It remains to be seen whether this 'privileged' treatment is a good thing for the country. It certainly keeps us from increasing the cost of debt.... But it also prevents us from accelerating on the long road to stronger public finances. "Until we get close to disaster, we're not going to take up the effort," a former public servant confidedly told us recently. Expect another update in six months.