A global credit rating agency downgraded France’s debt creditworthiness by one notch on Saturday, citing protests over pension reform as the cause. Two weeks after the vote on the disputed pension reform, persistent social movements threaten to erase the financial gains that the French government had hoped for.
As Nantes take on Toulouse on Saturday night in the highly anticipated French Cup final, the action may not be limited to the pitch. French unions have promised a stormy welcome to President Emmanuel Macron, who usually greets players from both teams on the pitch before the match kicks off.
They plan to distribute red cards and whistles to spectators outside the Stade de France, to express their anger at the pension reform.
Macron will always be there despite the pressure, alongside 3,000 police and gendarmes, but will not set foot on the ground so as not to be booed, according to AFP.
“The Coupe de France football final is not a match of Roman gladiators,” government spokesman Olivier Véran told French television channel BFM on Friday.
“The unions cannot use their imperial thumb to decide who should boo the president,” he said.
The disapproval of the French trade unions is not a surprise in the current context. An “imperial thumbs down” from a global credit rating agency, however, came as more of a shock.
A boost for the French economy
Rating agency Fitch on Friday cast a shadow over the French economy by downgrading its debt rating from “AA” to “AA-“, saying recent social and political pressures around pension reforms “will complicate the ‘fiscal consolidation’.
“Decision [to pass the reforms] has led to nationwide protests and strikes and will likely further strengthen radical and anti-establishment forces,” Fitch said. The current situation could also “pose a risk to Macron’s reform agenda and create pressure for a more expansionary fiscal policy or a reversal of previous reforms”, the agency wrote.
An ironic result, since the French government partly justified its decision to push through the disputed pension reforms as a way to avoid budget deficits and debt deterioration.
In an interview with the French daily The Parisian in December 2022, Prime Minister Élisabeth Borne warned that if nothing was done to slow France’s deficit, more than one hundred billion euros of additional debt would go to the pension system in the next ten years.
From now on, it seems that the political impasse and the social movements, consequences of the pension reform, place France in a position of economic fragility.
Finance Minister Bruno Le Maire rushed to reject the new rating shortly after it was released.
“I believe the facts invalidate Fitch’s assessment. We are able to implement structural reforms and we will continue to implement structural reforms for the country,” he said.
He went on to dismiss concerns about the government’s direction. “Do not doubt our entire determination to restore the nation’s public finances,” he said, adding that France had proven its ability “to push through reforms that transform its economic model.” He also promised to accelerate deleveraging, reduce the deficit and accelerate reduction in public spending.
The chairman of the National Assembly’s finance committee, Éric Coquerel, a member of the left-wing La France insoumise party, mocked the ratings and tweeted that “even the arbitrators of the financial center give a red card to Macron for his pension reform!
This is why the Fitch agency downgrades France’s rating: “Political impasse and social movements (sometimes violent) constituting a risk for Macron’s reform program”. So all the trouble for that! Even the arbitrators of the financial market give a card…
— Eric Coquerel (@ericcoquerel) April 29, 2023
Ignore red cards
But without an absolute majority in parliament, it will be difficult for Macron and his government to push through their ambitious reform plans. It’s already the case.
For lack of support from deputies, Prime Minister Élisabeth Borne has already decided to postpone until the fall, for example, the draft new law on immigration.
And Macron, along with other members of his government, has faced fierce opposition from the French people since pushing through the pension reform. Wherever they are, unrest seems to follow.
On Thursday, demonstrators loudly slammed pans near the castle of Fort de Joux on the border with Switzerland, where the head of state was to deliver a speech.
On the same day, hundreds of workers from state-owned electricity company Enedis parked their electric blue company cars outside the gates of the iconic Palace of Versailles, the former seat of French monarchs, in a symbolic action.
The rallies due to take place this Saturday for the French Cup final are just the latest attempt to disrupt a visit by President Macron.
The biggest red card yet to show, a big “imperial thumb down”, will take place this Monday, May 1st. The unions have pledged to make Labor Day a “massive” and “popular” demonstration against pension reforms, unheard of for nearly 15 years.