MADRID (MarketWatch) — french President Nicolas Sarkozy brushed aside on Monday the recent downgrade of France’s triple-A credit standing, saying rating agencies don’t set the economic policy of france and instead urging a focus on boosting growth and competitiveness to bring Europe out of the crisis.
At a press conference following a Madrid meeting with Spanish Prime Minister Mariano Rajoy, Sarkozy initially refused to answer questions regarding last Friday’s downgrade of several euro-zone nations by Standard & Poor’s, in a brusque and at times, defensive manner.
“I don’t understand your question...could you please ask a question that I can understand?” said Sarkozy, in response to questions about the downgrade of france.
He eventually answered that “it is not credit-rating agencies that set economic policies of our respective countries.”
“We must respond with calm and put it into perspective. In my view, these decisions don’t change anything. We have to reduce spending and improve competitiveness,” he said.
“The economic policy isn’t set on a day-to-day basis, and I don’t intend to take into account what these agencies say. We have to take into account the real economy,” said Sarkozy. “The deficit is too high and growth is too low and that is affecting the euro zone as a whole.”
Sarkozy also pointed out that while france was downgraded by one agency on Friday, another agency confirmed on Monday that France will retain its triple-A rating. Moody’s Investors Service said Monday that France’s triple-A rating remained under review, but also said the stability of that rating is at growing risk from external and internal pressures.
In addition to france, Austria also lost its triple-A rating from S&P on Friday, while Portugal’s debt status was cut two notches to junk and Italy and Spain’s ratings were also cut two notches. Read S&P downgrades anticipated, but still stir turmoil
Sarkozy stressed the importance of reform implementation by euro-zone members. “If Spain defaulted, we would all be adversely impacted. If Italy fails, we would all be negatively impacted. The french economy is intertwined with the Spanish and Italian economies. You have to feel a sense of solidarity,” he said.
He added that the french and German economies are so intertwined that if there were a problem in france, there would be a problem in Germany as well. He said spending cuts alone will not solve Europe’s issues.
“Europe is facing an unprecedented crisis, which requires that we should reduce our deficits and find a path to new growth by solving Europe’s competitiveness problems,”said Sarkozy.
He said france had made some key decisions already on its deficit and would “surpass commitments” it has already made.
Rajoy says hard work ahead for Spain
For his part, Rajoy said that while Spain was not pleased with the S&P downgrade, it was happy with last week’s bond auction, which saw solid demand and lower borrowing costs.
He also noted bond-market spreads appeared calm on Monday. The yield on the 10-year Spanish bond ES:10YR_ESP -0.15% fell 5 basis points to 5.146%. The Italian 10-year bond yield IT:10YR_ITA -0.13% appeared though, under more pressure, up 11 basis points to 6.6%.
Rajoy, whose center-right conservative party swept to an overwhelming victory in November’s general election, said it’s important that Spain acts quickly with its program of reforms. “My government is pursuing its own path, reducing public deficits, implementing structural reforms, and reorganizing the financial system,” he said.
He said the prior government had taken steps towards totally overhauling the financial structure of the country, but that those steps needed to go further. “I cannot give you any details, but the general objectives are exactly the same we fought for during the election,” he said.
The Spanish parliament recently approved the government’s new austerity measures amounting to €8.9 billion ($11.3 billion) in spending cuts. The measures include income tax hikes, which the government has said are severe, but necessary.
Rajoy said if the government had not acted quickly, it would have sent a “horrible message that Spain was standing still and not willing to solve its problems.” He said the measures will help Spain recover its position, spur economic growth and create employment and wealth.
“I believe it’s still possible to reduce public spending and not increase taxes more in the future, but obviously I must say in the same breath that nothing is forever in life. What I would like to see is a lowering of taxes. I can’t see this right now but perhaps a little bit later,” he said.
Both leaders expressed their support for a tax on financial transactions.
Rajoy said he and Sarkozy agreed the decision can and should be made immediately. Sarkozy said a group of leading countries should adopt the tax to encourage everyone else.
“It would be better to have a tax on financial transactions that covers the whole of the euro area, Europe and the world,” said Sarkozy. “It would be better to have a worldwide tax than one that would only affect a small number of countries, but if we have to wait for all the countries in the world to begin to set such a tax, it will never happen.”
re: Sarkozy pleads for calm after downgradeen>frfr>en By popocatptl Comments: 532, member since Mon Apr 09, 2007
On Tue Jan 17, 2012 07:30 PM
he s smart and he knows the situation france facing :
Financial downgrade , less possibility of substantial investment in industry , research... it s the confirmation of the decline
some wouldn admit , france is not a world nor a secundary power anymore , the reason is barely demografic , education does not
function as the policies of immigration require it to work
result france moving towards a thirld world nation : few rich
many poors which in fact are not apparent due to social fudings.
France is entering the era of energetic change with an uneducated population..
re: Sarkozy pleads for calm after downgradeen>frfr>en By OldLyme Comments: 35701, member since Fri Jun 04, 2004
On Thu Jan 19, 2012 07:25 PM
Greetings are a prized cultural love in the French culture. In the English world, people may jump straight to the matter at heart. The French will always give their 'Hello' and 'How are you?'.
In an informal situation, it is common practice to touch both cheeks and make a kissing sound; this act is called the 'bise'. The bise is done between all people regardless of age or gender, though in other regions of France, this may be different. This greeting is usually followed by the informal phrase "ça va?", which the common reply is "Oui, et toi?"(Yes, and you?)
In formal situations, it is practice that all people, whether female or male, merely shake hands, followed by the formal phrase "Comment allez-vous?" (How are you), in which the reply is "Je vais bien, merci, et vous?" (I am well, thank you, and you?)
re: Sarkozy pleads for calm after downgradeen>frfr>en By VAVD Comments: 2691, member since Wed Nov 25, 2009
On Thu Jan 19, 2012 09:59 PM
OldLyme wrote:
In an informal situation, it is common practice to touch both cheeks and make a kissing sound; this act is called the 'bise'. phrase "Comment allez-vous?"
This custom is a bit old-fashioned. Nowadays, it's more common when Frenchmen meet for them to briefly fondle each other's buttocks.
