Il downgrade of the French rating from triple A to AA+ by the Standard & Poor's agency immediately made noise on the websites of the main transalpine newspapers, even if the news had already been widely estimated. Anticipated by the Financial Times, it was then confirmed by Le Figaro, which cited government sources in Paris.
Le Monde analyzes the possible consequences on the economy. “First of all – explains the newspaper on its website – France now risks being excluded from the investment policies of major international funds, which rigorously select the safest debts, possibly classified as triple A. This is the case, for example, of the funds managed by Swiss banks, which are notoriously allergic to risk”.
In addition to the funds, central banks in countries outside the eurozone will also be tempted to lighten their investments in French bonds. Le Monde always explains it, which however underlines the real danger of losing triple A: “It will cause a domino effect towards all public bodies called "subsouverains" (sub-sovereigns), or territorial public bodies, companies owned or guaranteed by the State, which will in turn be downgraded".
"Triple A protects the French economy: the impact of its loss should not be minimized." So he had spoken the economist Christian Saint-Etienne shortly before the official news. The colleague echoes him Patrick Arthur, which however gives an optimistic interpretative key: “The consequences are very difficult to quantify, but it is certain that all companies linked to the State will suffer a lot. The entire system will be affected by the rating downgrade, even if the markets do not necessarily react badly. It all depends on whether the markets had really already considered the S&P move or not. We'll see on a case-by-case basis."
Decidedly optimistic, always on the columns of Le Monde, Nicolas Véron, of the Bruegel study centre: “Don't panic, the loss of the triple A does not mean that there will no longer be other triple A's in France: it is absolutely not said that there are automatic effects. Let's take the USA for example: in August they lost the AAA, but the big companies have still kept it”.
Also the CEO of Société Generale, Frédéric Oudéa, interviewed by Challenges.fr , shows little tendency to alarmism: "The French rating cut has already been metabolized by the markets, even if it could have consequences on the banking sector".
An in-depth analysis is also carried out by Les Echos, dividing it into questions. Now will the bailout fund also be downgraded? “In fact, the EFSF was established in June 2010 with the guarantees of the countries of the Eurozone, in particular of the 6 triple A (France, Germany, Austria, Finland, Luxembourg, Holland). Therefore, if one or two of these states is cut (as happens today to France and also to Austria), it is logical that the fund is in turn downgraded by one or two points”. What happened to the US when they lost the AAA? “It was certainly a shock for the political class, especially for the Obama administration, but all in all it didn't have a dramatic effect on the markets. Indeed, US interest rates did not rise and the dollar even gained against the euro”. How long does it take to win back a triple A? “According to the background, between 10 and 18 years: Canada, Australia, Denmark, Finland and Sweden took about that time to reduce their debt. The fastest was the North American country, which recovered it in just 10 years”. Will the eurozone lose its appeal to investors? “To date, despite the crisis, the eurozone continues to attract foreign investors. In all, net capital inflows amounted to €335 billion over the past year. In any case, foreign sovereign wealth funds did not wait for the S&P rating to revise their investment prospects in euro countries downwards”. And the consequences for savers? “France will probably see its interest rates rise, which could lead to capital losses for savers. In general, a new climate of austerity will inevitably weigh down the stock exchanges and the stock market”.
Finally, both Les Echos and Libération emphasize the hard blow for Nicolas Sarkozy, one hundred days before the presidential elections in which he will ask the French to renew his mandate for another 7 years. Les Echos even reports an alleged confession given in private by the current president: "If we lose the triple A, I'm dead"; but the same newspaper also warned the opposition: "The downgrading will be a double-edged sword for the left, because the margins for intervention will shrink". Libération is also tough: “Smacco per Sarkozy”.
