France likely to face new 'jolts' from debt crisis: PM

15th December 2011, Comments 0 comments

French Prime Minister Francois Fillon said here Thursday that his country was likely to face new "jolts" from the eurozone debt crisis amid rumors that it could lose its triple-A debt rating.

In a speech to the Sao Paulo Federation of Industries, Fillon downplayed the risk of a downgrade, stressing that "what matters is not the judgment on a given day" of rating agencies but "the politically structured and rigorous budgetary trajectory that Europe, that France have decided to adopt."

"The crisis is not over and it is likely that we will have to face jolts. Markets and rating agencies have their own logic," he said. "They deal with the immediate, the instantaneous."

Two agencies, Standard & Poor's and Moody's, have warned that they are putting France and its EU partner's debt under scrutiny, and markets see Paris as likely to drop one or even two rungs on the ratings ladder.

On Monday French President Nicolas Sarkozy appeared to accept that France is facing a downgrade of its triple-A credit rating when he declared that he would overcome this challenge to his policy.

"It would be another difficulty, but not an insurmountable one," he said in an interview with the daily Le Monde. "If they decide to take it away from us we'll face the situation with sang froid and calm."

"What counts more than anything is the credibility of our economic policy and our determined strategy to reduce spending. We will scrupulously honour all the engagements that we have made," Sarkozy said.

Fillon arrived in Sao Paulo late Wednesday on the first leg of a four-day visit to Brazil.

Accompanied by three ministers and around 30 French business leaders, he was to head to Brasilia later Thursday for talks with President Dilma Rousseff on the eurozone debt crisis, bilateral trade and military sales.

In an interview with the daily Folha de S.Paulo published Wednesday, Fillon said that "the stagnation of the European economy can be stopped," provided the European Union reorganizes itself and sheds its debts.

Brazil, Latin America's dominant power and now the world's sixth biggest economy, posted 2010 GDP growth of 7.5 percent but expects growth of only 3.5 percent this year as a result of the eurozone debt crisis and the US economic slowdown.

© 2011 AFP

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