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POLITICS

French Senate rejects EU-Canada trade deal

France's Senate on Thursday overwhelmingly voted against a free-trade agreement between the EU and Canada thanks to an unusual alliance in the upper house between left and right wing opponents of French President Emmanuel Macron.

Published: 21 March 2024 17:12 CET
French Senate rejects EU-Canada trade deal
France's Senate. Photo AFP

The Comprehensive Economic and Trade Agreement (CETA) has been in force provisionally since 2017, but requires ratification in all European Union member countries to take full effect.

Macron and his centrist parliamentary allies managed to get the deal approved in the National Assembly lower house in 2019 by a slim margin, but backing by the Senate upper house – where they are in a clear minority – is needed for ratification.

After scenes of tension rarely seen in the upper house, senators voted 211 against and 44 for the treaty and then confirmed the rejection with a second vote.

There had been some expectations that opponents of the treaty would run out of time for the confirmation vote but they managed to squeeze it in by racing through the debate.

Although a setback for the government, which backs the treaty, the no-vote does not in itself nullify the agreement.

Under EU rules, the rejection is only effective if the government officially notifies the EU, which Macron is not expected to do.

The government has not said how it will handle the situation, but one option is to take the treaty back to the National Assembly for a fresh debate and vote.

Seventeen of the EU’s members have ratified the deal, with the process still ongoing in 10 countries.

France is the second country to have rejected ratification.

The first, Cyprus, has not notified the EU Commission of its no-vote and continues to apply the treaty pending a new vote.

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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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