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Thursday, 18 December 2014

French finance minister says government policies "bearing fruit" as Fitch lowers France's rating to AA - say what?

You don't need to be an expert in economics to know there's something not quite right about two pieces of news that broke towards the end of last week.

First up ratings agency Fitch reduced France's credit grade from AA+ to AA saying that the country's "efforts to trim its fiscal deficit have fallen short to avoid a downgrade."

Or in ratings speak, "The weak outlook for the French economy impairs the prospects for fiscal consolidation and stabilising the public debt ratio."

Not exactly a resounding endorsement of France's efforts to its tackle its public debt or the measures put in place to boost the economy.

But hey ho. This is France, the country in which successive governments seem to believe faithfully in the power of La méthode Coué or autosuggestion and positive thinking.

In other words, if you say something often enough, you'll come to believe it - even if all the evidence points to the contrary.

So up popped the French finance minister, Michel Sapin, to share his response in a statement which...well almost defies belief.

Michel Sapin screenshot from RTL radio interview, October 2014

"Government policies are beginning to bear fruit as companies benefit from cuts in levies and that'll continue in the coming years," he said.

"In Europe's difficult economic environment in Europe , we're going to maintain the course we've already set with the implementation of planned economies , and the continuation of reforms needed to boost growth and make companies more competitive."

In other words, an ostrich head in sand style, "We're not taking any notice of what any ratings agency says as we know best how to (mis)handle our own economy". the way M Sapin, Father Christmas isn't real.

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