France downplays rating downgrade

French Prime Minister, François Fillon, has defended french government's economic policies after knowing the decision by Standard & Poor's to downgrade the credit rating of France.

Standard and Poor's said that Europe's austerity and budget discipline were not enough to fight the debt crisis.

Mr Fillon told a news conference that if France was in the firing line, it was primarily because of its exposure to the crisis in the eurozone. He has said that this decision constitutes an alert which should not be dramatised any more than it should be underestimated.

It was not government policies that were under attack from the rating agency and so those economic policies would be kept, with the goal of cutting spending and bringing the annual budget back into surplus by 2016.

German Chancellor Angela Merkel also spoke on Saturday, saying Europe still had a long road until restore investor confidence, after the multiple credit rating downgrades of nine eurozone countries in total.

On Friday, Standard & Poor's said France was being downgraded one notch, to AA+. The country still has a top AAA rating from the other two main ratings agencies, Moody's and Fitch.

Standard & Poor's also said that Italy, Spain, Cyprus and Portugal were cut two notches and Germany kept its AAA rating.

Austria, Slovakia, Slovenia and Malta were the other of the downgraded countries.

The cut in the so-called sovereign ratings of governments is likely to lead to most other borrowers domiciled in the same countries - including banks and companies - being downgraded.

Although the move has been widely expected, it is still likely to make it somewhat more difficult and expensive for borrowers from those countries to raise money, including for the governments themselves.

Xabier