France rumoured to be days away from AAA rating downgrade
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France could see its coveted top triple A rating downgraded by agency Standard and Poor's within the next ten days according to the French financial newspaper, La Tribune. Citing several sources, the paper reports the rating agency is carrying out an "intense reflection" on whether to change its outlook on French government debt to negative.
The paper's sources claims the outlook change was due to be announced on Friday but had been delayed for unknown reasons.
Last week, agency Moody's warned that France's top rating was under threat amid an increase in government borrowing costs, slowing growth and the eurozone crisis.
Six billion euros of security margins are in place to deal with hazards to growth
Despite rumours of a downgrade Economy Minister François Baroin in an interview with France Info radio on Tuesday that Paris would not revise its predicted growth figure of one per cent for 2012 and had no plans to introduce a third austerity plan to reduce the country’s budget deficit.
He was backed up by Budget Minister Valérie Pecresse who told France 2 televsion that Paris was sticking to it economic growth forecast despite figures from the OECD on Monday which showed a drop in its growth forecast for France from 2.1 per cent to 0.3 per cent.
She said that six billion euros of "security margins" were in place to deal with "hazards to growth" and that France and Germany were working to change eurozone governance in order to impose more discipline and solidarity to fight the debt crisis.
The Organisation for Economic Cooperation and Development warned on Monday that
top global economies are one step from a deep recession driven by the eurozone debt crisis and a fiscal stranglehold in the United States.
Recession and even depression could spread through advanced economies if the crisis takes another sharp turn for the worse, the OECD said.