The news out of socialist France today is that Moody’s is downgrading the country’s AAA credit rating. (Hardest hit: Barack Obama who had high hopes that the socialist model was the key to America’s economic recovery.)
France’s response? Meh:
“The rating change does not call into question the economic fundamentals of our country, the efforts undertaken by the government or our creditworthiness,” Finance Minister Pierre Moscovici told a news conference on Tuesday.
Monday’s downgrade, which follows a cut by Standard & Poor’s in January, was expected but is a blow to Socialist President Francois Hollande as he tries to fix France’s finances and revive the eurozone’s second largest economy.
France, a core member of the euro zone, has been borrowing at historic low levels of around 2pc for long-term bonds as investors consider it a safe haven from the turbulence in southern countries such as Greece and Spain.
Yet Moody’s said it was keeping a negative outlook on France due to structural challenges and a “sustained loss of competitiveness” in the country, where business leaders blame high labour charges for flagging exports.
“The first driver underlying Moody’s one-notch downgrade of France’s sovereign rating is the risk to economic growth, and therefore to the government’s finances, posed by the country’s persistent structural economic challenges,” Moody’s said.
Wait, so socialism isn’t good for economic growth? I’ll be darned…