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UKRAINE

France to build new floating terminal to ensure gas supplies this winter

The French government aims to have its natural gas storage reserves at full capacity by autumn, with European countries bracing for supply cuts from major supplier Russia as the Ukraine war continues, Prime Minister Elisabeth Borne said on Thursday

Published: 23 June 2022 17:28 CEST
France to build new floating terminal to ensure gas supplies this winter
Photo by Ina FASSBENDER / AFP

“We are ensuring the complete filling of our storage capacities, aiming to be close to 100 percent by early autumn,” and France will also build a new floating methane terminal to receive more energy supplies by ship, Borne said.

France is much less dependant on Russian gas than its neighbours, and announced earlier this week that it has not received any Russian gas by pipeline since June 15th.

Meanwhile Germany moved closer to rationing natural gas on Thursday as it raised the alert level under an emergency plan after Russia slashed supplies to the country.

“Gas is now a scarce commodity in Germany,” Economy Minister Robert Habeck told reporters at a press conference.

French PM Borne on Thursday also confirmed that the bouclier tarifaire (price shield) will remain in pace until the end of 2022 – this freezes the price of household gas and limits rises in electricity bills for homes to four percent.

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ECONOMY

S&P downgrades French credit rating in blow to Macron

Ratings agency Standard & Poor's downgraded France's credit score on Friday citing a deterioration in the country's budgetary position, a blow to Emmanuel Macron's government days before EU parliamentary elections.

Published: 1 June 2024 15:44 CEST
S&P downgrades French credit rating in blow to Macron

In a statement, the American credit assessor justified its decision to drop France’s long-term sovereign debt rating from “AA” to “AA-” on concerns over lower-than-expected growth.

It warned that “political fragmentation” would make it difficult for the government to implement planned reforms to balance public finances and forecast the budget deficit would remain above the targeted three percent of GDP in 2027.

The S&P’s first downgrade of France since 2013 puts the EU’s second-largest economy on par with the Czech Republic and Estonia but above Spain and Italy.

The announcement will sting for Macron, who has staked a reputation as an economic reformer capable of restoring France’s accounts after low growth and high spending.

The risk of a ratings downgrade had been looming for several quarters, with the previous “AA” assessment given a “negative outlook”.

The surprise slippage in the public deficit for 2023 to 5.5 percent of Gross Domestic Product (GDP) instead of the expected 4.9 percent did not play in the government’s favour.

France’s general government debt will increase to about 112 percent of GDP by 2027, up from around 109 percent in 2023, “contrary to our previous expectations”, the agency added.

Responding to the downgrade decision, Economy Minister Bruno Le Maire reaffirmed the government’s commitment to slashing the public deficit to below three percent by 2027.

“Our strategy remains the same: reindustrialise, achieve full employment and keep to our trajectory to get back under the three percent deficit in 2027,” he said in an interview with newspaper Le Parisien, insisting that nothing would change in the daily lives of the French.

Le Maire claimed the downgrade was primarily driven by the government’s abundant spending during the Covid pandemic to provide a lifeline to businesses and French households.

The main reason for the downgrade was because “we saved the French economy,” he said.

Government critics offered a different rationale.

“This is where the pitiful management of public finances by the Macron/Le Maire duo gets us!” Eric Ciotti, head of the right-wing Republicans party, wrote on social media platform X.

Far-right leader Marine Le Pen called the Macron administration’s handling of public finances “catastrophic” and denounced the government as being “as incompetent as they are arrogant”.

A credit downgrade risks putting off investors and making it more difficult to pay off debt.

Earlier this year, influential ratings agencies Moody’s and Fitch spared handing France a lower note.

S&P also maintained its “stable” outlook for France on Friday on “expectations that real economic growth will accelerate and support the government’s budgetary consolidation”, albeit not enough to bring down its high debt-to-GDP ratio.

“S&P’s downgrading of France’s debt simply reflects an imperative that we are already aware of: the need to continue restoring our public finances,” Public Accounts Minister Thomas Cazenave wrote in a statement sent to AFP.

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