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Thursday, December 15, 2011

French banker: UK should be downgraded first

Christian Noyer, chairman of the French central bank, on a visit to Singapore, 30 November

The chairman of the French central bank, Christian Noyer, has said ratings agencies should downgrade the UK before France because its economy is weaker.

US agency Standard and Poor's recently warned Franceits rating could suffer over the eurozone crisis and downturn.

"The downgrade does not appear to me to be justified when considering economic fundamentals," Mr Noyer said.

The British Government responded by saying the UK had a credible plan for dealing with its deficit.

Speaking to French regional newspaper Le Telegramme, Mr Noyer said any downgrade should start with Britain "which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping".

Britain was not identified as a credit risk by Standard and Poor's in its report earlier this month.

The spokesman for UK Prime Minister David Cameron said: "Credit ratings are a matter for credit rating agencies but we've put in place a credible deficit reduction plan and you can see that credibility in the UK's bond yields."

There is a sense of frustration across the eurozone that last week's summit in Brussels seems to have done little to calm the financial markets, the BBC's Chris Morris reports.

Relations have been strained between France and Britain, which vetoed changes to the Lisbon Treaty that would have allowed for closer economic integration.

Hungary and the Czech Republic raised concerns on Thursday about the plans for a closer fiscal union, saying they should apply only to eurozone states.

Loss of the top credit grade would have serious economic implications for France, increasing the interest rate it paid for new state borrowing.

Mr Noyer accused ratings agencies of putting at risk "the positive feeling that existed on the markets the day after the Brussels summit".

In the French parliament, Finance Minister Francois Baroin poked fun at Britain, saying the fiscal 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," he said.


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