S&P holds French rating, praises reforms

Rating agency Standard and Poor’s on Friday maintained its rating for France at “AA” with a stable outlook, welcoming a raft of new reforms but warning that targets were unduly optimistic. “In our view, the French government has shifted toward policies to reduce labour costs and corporate taxation in order to improve the economy’s competitiveness,” S&P said in a statement. The agency said it thought the government would manage to reduce the public budget deficit to less than 3.0 per cent of annual gross domestic product by the end of 2017, but that debt would remain high and would grow up to 2017. The date estimated by S&P for achieving the 3.0-per cent deficit limit is two years later than the deadline of 2015, already delayed by two years, set by the European Commission. In early trading on Friday, the yield, or interest rate, on 10-year French bonds eased slightly to 1.997% from 2.009% late on Thursday. On Wednesday, the new French Socialist Prime Minister Manuel Valls laid out a switch of economic policy with a programme of measures to reduce the public deficit to the EU ceiling of 3.0% of output, saying that France was sticking to the EU deadline for this at the end of next year, according to AFP.