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France

UK should be downgraded, not us, says France

Text by News Wires

Latest update : 2011-12-16

French Finance Minister François Baroin and central bank chief Christian Noyer (pictured) renewed a cross-Channel economic row Friday, noting that France risks a ratings downgrade despite Britain having "as much debt, more inflation and less growth".

AFP - France fuelled a burgeoning cross-Channel row on Friday, describing Britain's economy as "very worrying" as the press in London reacted with fury to French calls for British debt to be downgraded.

The row comes after Britain clashed with France at last week's EU summit and refused to join members of the eurozone single currency bloc in a new fiscal pact, prompting French President Nicolas Sarkozy to declare there are now "two Europes".

Despite widespread condemnation in London of criticisms from Paris on Thursday, Finance Minister Francois Baroin picked up the issue again on Friday, saying the French economy was in better shape than the British one.

"It's true that the economic situation in Great Britain is very worrying and that we prefer being French rather than British on the economic front at the moment," Baroin said on Europe 1 radio.

"We don't want to be given any lessons and we don't give any," he said.

Baroin's comments came as the British press on Friday slammed French officials for suggesting that ratings agencies were targeting the wrong country for a debt downgrade by looking at France.

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

French Prime Minister Francois Fillon picked up on the theme on Thursday, telling reporters in Sao Paolo that ratings agencies seemed to be ignoring the state of British government finances.

"We are challenged on the European currency, first of all because we are too indebted," he said. "But we are not the only ones. Our British friends are even more indebted than we are and have a higher deficit, but the ratings agencies do not seem to notice this."

Prime Minister David Cameron's official spokesman had rejected the French criticism, insisting Britain had a "credible" economic plan.

British officials would not be drawn into responding directly to the French attacks, but the British press reacted furiously.

Noyer's comments were dismissed as "outrageous" and "plain wrong" by The Times.

"It is simply not the job of a central bank governor to urge the downgrading of another country's credit," it added.

Popular tabloid The Sun ran a scathing leading article attacking "treacherous" Noyer under the headline "Gall of Gaul".

"You find out who your friends are in a crisis," it continued. "We shouldn't be surprised, then, when the head of the Bank of France tries to better his country's economic position by sabotaging ours."

"Monsieur Noyer, you're a AAA-rated fool," it concluded.

The Daily Telegraph, which carried "France declares war of words on Britain" as its front-page headline, quoted Conservative lawmaker David Ruffley calling the comments "another example of Gallic self-delusion on an epic scale".

The concerted French attack came ahead of elections next year and as France's statistics agency warned Thursday the country will fall into a mild recession in the final quarter of this year and the first quarter of 2012.

Analysts said French officials seemed to be looking to deflect attention from the country's own economic concerns.

In its morning briefing note, British foreign exchange firm Moneycorp described Noyer's attack as "a clumsy attempt to divert attention from the possibility that France itself could lose its triple-A rating."

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 cannot 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.

The shock decision by Britain a week ago to stand aside from a new European Union architecture to control budgets has caused strains between the EU and Britain.

But Poland, which is coming to the end of its presidency of EU meetings, said on Friday that Britain would send experts to a meeting of the other 26 EU members at the end of the month on saving the 17-nation eurozone

Date created : 2011-12-16

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