Global financial ratings agency Fitch downgraded France’s sovereign debt rating to “AA” with a stable outlook. France's long-term foreign- and local-currency grade was previously “AA+”. The downgrade reflects the absence of a material improvement in the nation’s public debt dynamics and slippage in the budget deficit targets.
The Fitch statement reads France’s outlook is still rather feeble. To make things worse, the country’s economic growth is expected to be much lower this year than an average GDP print for the whole euro area.
Cutting France’s sovereign rating puts the eurozone's second-largest economy on the same level as that of heavily indebted Belgium.
According to the government’s estimates, the public deficit will amount to 4.4% in 2014. Paris projected a deficit for the fiscal year 2015 of 4.1% of GDP, down from 4.3%. However, the new projection is still above the European Union limit of 3%. The New York-based agency insists that the forecast means no improvement against 2013 when this indicator also came in at 4.1%.
