BBC World Service

France might be next country to get the downgrade treatment

Rob Young Aug 8, 2011
HTML EMBED:
COPY
BBC World Service

France might be next country to get the downgrade treatment

Rob Young Aug 8, 2011
HTML EMBED:
COPY

STEVE CHIOTAKIS: Investors and economists are now asking who’s next? Which country do investors and economists think is headed for the same fate as the United States? A lot of folks think France’s rating will be cut next.

The BBC’s Rob Young reports.


ROB YOUNG: France may be next on the downgrade hit list. Some analysts say French debt levels are as unsustainable as America’s.

Neil Mackinnon is an economist at VTB Capital, an investment bank, in London.

Neil Mackinnon: The debt level of France is highest among all of the Eurozone AAA rated countries, and its government budget deficit is the second-highest. In addition, we know that French banks have the most exposure to Greek debt, Irish debt, Portuguese debt, within the Eurozone.

If Greece, Ireland and Portugal struggle to repay their debs, France could be in trouble. And that’s what has credit rating agencies worried. But it’s not just France who risks the loss of its top-notch credit rating in Europe. Belgium and even the U.K. are seen as vulnerable to a downgrade.

The U.S. — as the world’s biggest economy — may be able to weather the storm of a debt downgrade. However, smaller countries may not.

I’m the BBC’s Rob Young, for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.