France mocks 'marginalised' Britain's economy

15th December 2011, Comments 0 comments

Senior French financial officials mockingly criticised the British economy on Thursday, arguing that ratings agencies are targeting the wrong country for a debt downgrade.

"They should start by degrading the United Kingdom, which has greater deficits, as much debt, more inflation and less growth than us," central bank chief Christian Noyer told the regional newspaper Le Telegramme.

Noyer also warned that Britain, which clashed with France at last week's EU crisis summit and refused to join the members of the eurozone single currency bloc in a new fiscal pact, was facing a credit crunch.

In parliament, Finance Minister Francois Baroin said the pact had been backed by every country in Europe, "with the singular, now solitary, exception of Great Britain, which history will remember as marginalised.

"Great Britain is in a very difficult economic situation, a deficit close to the level of Greece, debt equivalent to our own, much higher inflation prospects and growth forecasts well under the eurozone average.

"It's an audacious choice the British government has made," he said.

Britain rejected the French criticism, insisting that its deficit-cutting plan had won the trust of the markets.

Prime Minister David Cameron's official spokesman also downplayed speculation London was seeking alliances with other non-eurozone EU states in a bid to undermine a fiscal pact to save the single currency.

He insisted that Britain had a "credible" economic plan, although he refused to be drawn into a new row with France following the bust-up over London's decision to veto a new EU treaty.

"We have put in place a credible plan for dealing with our deficit and the credibility of that plan can be seen in what has happened to (borrowing costs) in this country," said the spokesman.

US ratings agencies Standard & Poor's and Moody's have warned that France is close to losing its prized triple-A debt rating over fears that eurozone members can not control their rising debt and deficits.

Britain, which is outside the euro and which has the Bank of England to act as a lender of last resort in the event of debt problems, is seen as a safe haven by bond buyers as the debt crisis engulfs the eurozone on its doorstep

Fitch, a French-owned ratings agency, has warned London its triple-A is at risk if further shocks hit the economy.

Fitch predicts Britain's debt will peak at 94 percent of gross domestic product, above Germany at 83 percent and France at 92 percent.

Noyer also claimed that France's banks were better capitalised than many of their European and American rivals.

In recent days, Cameron has spoken to his counterparts in Sweden and the Czech Republic, both countries which do not use the euro and have voiced reluctance about the proposed new fiscal pact.

He has also spoken to the prime minister of Ireland, a eurozone member which may hold a referendum on the agreement at the risk of derailing it.

Cameron's spokesman insisted he would "engage constructively" in talks about the new agreement, downplaying speculation he was agitating against it.

"He has been speaking to a number of different European leaders in recent days and will continue to do so in the coming days, with the objective in mind of making clear that we want to engage constructively," the spokesman said.

"There is an inter-governmental agreement and a discussion about how to implement that inter-governmental agreement and we are seeking to engage constructively in that discussion," he added.

© 2011 AFP

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