A strong slap of the French economy to Macron on the eve of the European elections

– International news – Tasnim news, the German newspaper “Handelsblatt” in an article about the deterioration of the economic situation in France as the Achilles heel of “Emmanuel Macron”, the president of France On the eve of the European parliamentary elections, he wrote: Macron will receive a budget slap shortly before the European elections.

Standard & Ports rating agency S&P downgraded France’s credit rating. Markets are now largely pricing in bullish conditions. This negative ruling is more than anything a political risk for Macron.

This article continues: In this way, about a week before the European elections, “Emmanuel Macron”, the French president, because of the budget policy You have failed. S&P downgraded the credit rating of the EU’s second largest economy from “AA” to “AA-“. The rating agency doubts that France will be able to fulfill Macron’s promise to reduce the budget deficit below the three percent ceiling by 2027. 2023 was significantly higher than expected. Paris also had to raise its initial forecast for this year. While markets appear to have largely priced in this worsening public finances, the negative verdict represents a political risk for Macron.

S&P expects a 2027 budget deficit of approx. 3.5 percent of the gross domestic product (GDP). The French government’s target is 2.9 percent. After costly aid programs during the pandemic and an energy crisis caused by Russia’s war on Ukraine, Macron wants to stick to the three percent limit again at the end of his presidency.

European debt rules were suspended for four years because The Corona epidemic has been implemented again since the beginning of 2024. The EU Commission is expected to launch excessive deficit procedures against France and other member states in the fall. Meanwhile, French Finance Minister Bruno Le Maire said he would take S&P’s decision into account. have given. According to him, the government is still determined to achieve the budget deficit goals. Referring to the financial aid during the corona crisis and the energy price cap, Lommer told Le Parisien newspaper: “The main reason for this downgrade is that we saved the French economy. However, the payments Support for companies and households was generous in France compared to other EU countries. Macron made some structural reforms such as raising the retirement age. On the other hand, Macron solved political problems such as farmers’ protests with new government aid.

Then S&P also judged that France’s economy and public finances will continue to benefit from reforms under Macron in the coming years; But without additional measures to reduce the budget deficit, these reforms will not be enough for the country to achieve its budget goals.

According to official French estimates, this year’s budget deficit will be 5.1% of the gross domestic product (GDP). It is much higher than the previous forecast of 4.4 percent. Until 2023, the deficit was 5.5% higher than the government’s initial assumption of 4.9%. Paris blamed slowing economic growth and falling tax revenues.

In February, Lemur announced a 10-billion-euro austerity round due to the worsening budget situation. In April, he added: “In the current financial year, they want to reduce another 10 billion euros… but the details are not yet clear.

In mid-March, the Court of Auditors in Paris also criticized unusually strong criticism. He expressed Macron’s budget policy. The financial watchdog warned that the government’s financial situation was “serious” and “worrying”. Accordingly, budget cuts of at least 50 billion euros are necessary to meet the planned three percent deficit ceiling in 2027.

Absolutely, no EU member is as indebted as France. In relation to GDP, France’s debt is around 110%. S&P expects that debt to rise to 112 percent of economic output by 2027.

At the end of April, the other two major rating agencies, Fitch and Moody’s, left their credit ratings unchanged for France. According to analysts, the downgrade by S&P is unlikely to have an immediate impact on the country’s financing conditions.

Matthew Bailey of investment firm Octo AM told Les Échos newspaper: Credit ratings are merely to quantify the risk involved in It already exists and is largely accepted by market players”. But Macron’s government must now deliver on its promised budget integrity. The rating agency’s decision comes at a very inopportune moment for the president.

Macron’s centrist party is already threatened with a serious defeat in the June 9 European elections. The downgrade now gives the opposition another opportunity to criticize Macron. The French president is under pressure at home and lost the majority of the National Assembly two years ago.

end of message/