Presidential hopefuls cash in on France AAA loss
The loss of France’s AAA credit rating is a potential boon to presidential hopefuls trying to catch up with the two candidates from France’s biggest political parties.
The loss of France’s AAA credit rating by Standard & Poor’s three months ahead of the presidential election sent shockwaves across the country’s political landscape and spelt potential trouble for the race’s two frontrunners.
The right-wing government of President Nicolas Sarkozy rushed to minimise the potential damage of the S&P cut. On Saturday, French Prime Minister Francois Fillon said the downgrade was not a surprise. President Sarkozy reacted on Sunday, saying he would present reforms aimed at stimulating economic growth by the end of the month.
“This is a test and as such, we have to confront it” he said.
Sarkozy is widely expected to seek re-election in France’s April 22 presidential poll, but has not yet made his candidacy official. He is closely trailing opposition Socialist Party candidate François Hollande, the frontrunner according to current opinion polls.
Hollande immediately took advantage of S&P’s announcement to lay blame for the downgrade squarely at the door of the president. “It’s not France that was downgraded, it’s a certain policy,” the Socialist candidate told supporters on Saturday in clear reference to Sarkozy’s government.
However, according to political analysts in France, candidates running alongside Hollande and Sarkozy are more likely to reap the benefits from S&P’s announcement.
For Eric Bonnet, director of research at the French BVA polling institute, the AAA downgrade plays directly into the hands of centrist François Bayrou, far-right leader Marine Le Pen, and the Communist Party-backed candidate Jean-Luc Mélenchon.
Bonnet says the downgrade will likely be viewed as a political failure for Sarkozy. “The electorate on the right has already expressed its disappointment in his tenure, and this could further steer votes away from Sarkozy to Bayrou or Le Pen,” he said.
Jérome Saint-Martin, director of opinion studies at polling institute CSA, said S&P’s decision also represents a hurdle for Hollande’s campaign. “The downgrade will force him to tone down campaign promises and avoid talk of boosting state spending in the future,” Saint-Martin said.
Pollsters agree voters will likely feel Hollande has yet to commit to concrete solutions and so be inclined to vote for Jean-Luc Mélenchon, a candidate farther to left ideologically than the Socialist candidate.
“Switching support to Bayrou, Le Pen and Mélenchon was already a trend among voters. We can assume [the downgrade] will accelerate this trend,” Bonnet said.
Reaping political returns
The ‘outsider’ candidates appear well-aware of the new opportunity to relay their ideas and score points among voters.
Bayrou, who came in third in the 2007 election, reacted quickly to the loss of the AAA. He told journalists just hours after news broke, that previous French governments on both the right and left were responsible for the downgrade.
"All the optimistic and authoritative statements of recent months are thus cruelly contradicted by the facts," said Bayrou, who launched his election bid on Dec. 8 and is polling at around 12 per cent support.
Le Pen, candidate for the far-right National Front who currently has around 19 per cent backing , used the event to confirm her repeated calls for France to quit the euro and distance itself from European Union institutions.
Mélenchon, on track to win 6 per cent of votes, called on people to rally in protest at S&P’s Paris offices. “Standard & Poor’s had declared financial war on France…. We must fight back," the leftist said.
Standard & Poor’s downgraded nine European countries in total on Friday, stripping France and Austria of their triple-A status. On Monday, the Moody’s rating agency said that, unlike S&P, it was maintaining France’s AAA, but analysts say that the damage left by S&P’s announcement will not easily be undone.