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France’s constitutional council rejects bid for referendum on pension reform

France's constitutional council on Wednesday rejected a bid to organise a referendum on President Emmanuel Macron's bitterly contested pension reform.

Published: 3 May 2023 19:47 CEST

France's constitutional council rejects bid for referendum on pension reform

Photo by Ian LANGSDON / AFP

Around 250 left-wing opposition lawmakers had requested the public vote in a bid to thwart Macron raising the retirement age to 64 from 62 which has sparked four months of protests and strikes.

The application was turned down by the constitutional council on the grounds that the request did not meet the required criteria for a referendum, it said in a statement.

EXPLAINED: What does France’s Constitutional Council actually do?

Macron has signed the pension reform into law, with the changes set to take effect later this year.

Opposition lawmakers have not given up on their efforts to thwart him, with a bill set to be presented in parliament on June 8th that seeks to water down key parts of the new pensions law.

But even if approved in the lower house, where the ruling party is in a minority, the bill would be highly unlikely to clear the upper-house Senate.

Trade unions have called for a 14th day of nation-wide protests on June 6th.

LATEST: Will French pension strikes continue over summer?

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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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