France downgraded by Fitch

The US-based agency Fitch made a change on France's sovereign debt, saying the country's revised deficit-reduction target was not enough to avoid a downgrade. France's long-term foreign- and local-currency grade was previously AA+.

In Europe, only Finland, Germany, the Netherlands, Austria and Luxembourg retain a 'AAA' ranking.

"The weak outlook for the French economy impairs the prospects for fiscal consolidation and stabilizing the public debt ratio," the ratings agency said in a statement on Friday. It said the outlook on France's long-term ratings was stable.

The government in France had projected a deficit for the fiscal year 2015 of 4.1 percent of GDP, down from 4.3 percent. But the projection is still above the European Union limit of 3 percent. Despite the lower deficit projection, Fitch made the downgrade judging that "on its own, this will not be sufficient to significantly change Fitch's projections of France's government debt dynamics."

France is Europe's second-biggest economy behind Germany. But France's economy has barely grown over the last three years and has a rising budget deficit.

The European Commission announced on December 11 that "further reform efforts are needed" in France. "In some policy areas reforms are progressing, but there remains uncertainty on their expected outcomes and their effectiveness," the EC concluded.

Last October the New York based agency said "it would likely downgrade the ratings by one notch in the absence of a material improvement in the trajectory of public debt dynamics following the European Commission's opinion on France's 2015 budget."

jm/es (Reuters, AFP)