08/11/2013 - France Credit Rating Cut Again

France Credit Rating Cut Again.France Credit Rating Cut Again

The World’s leading credit rating agency, Standard & Poors, has again cut France’s credit worthiness rating.

France was cut from AAA to AA+ 20 months ago.

Yesterday, it cut France’s rating again from AA+ to AA.

It sighted France’s high debts and extremely high unemployment making it difficult for France to come out of recession and fund/repay its debt.

Comment

The cut in the credit rating will make it more expensive for France to borrow. This will place additional strain on the economy and we have long said France is in a worse position than most people realise.

The Trade Union movement is very strong in France and this again makes it difficult for spending cut backs and other austerity measures.

We expect France to toughen its position on debt and austerity and increase taxes further. This will then have a knock on effect, we believe, of further industrial action similar to those of recently Greece and the UK back in the late 1970’s with the ‘winter of discontent’.



Markets across the Western World fell yesterday and we suggest investing clients should expect yet another winter of volatile stock markets.