20 November 2012

Reuters: France to answer ratings downgrade with reforms

France said it would respond to Moody's credit downgrade by pushing ahead with economic reforms, but complained the ratings agency had overlooked efforts already taken to revamp the eurozone's second largest economy.

With France's €2 trillion economy teetering on the brink of recession, Hollande surprised many this month by unveiling measures to spur industrial competitiveness, chief among them the granting of €20 billion in annual tax relief to companies, equivalent to a 6 per cent cut in labour costs. The government had already announced €30 billion in budget savings next year in an effort to meet its deficit goal, and is working on reforms to labour laws to enable companies to hire and fire more easily with economic swings.

"Certain criticisms are too strong or are too late. I would have preferred that the bold and unprecedented decisions on the crisis were better received", Moscovici said of Moody's. He said it was unfair to flag concerns over French banks as they have already reduced exposure to troubled southern European countries such as Greece.

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