France to push ahead with cost-cutting measures

PanARMENIAN.Net - France's Prime Minister said Saturday, Jan 14, his country will push ahead with cost-cutting measures after its top-tier debt rating was downgraded, a blow with repercussions across financially beleaguered Europe.

Other European countries from Austria to Cyprus assailed ratings agency Standard & Poor's after a raft of downgrades Friday night. The move may make it more expensive for struggling countries to borrow money, reduce debts and avoid a new recession.

French Prime Minister Francois Fillon struck a somber, measured tone when responding Saturday to the downgrade, which was particularly wounding to France's self-image and could hurt bailout efforts for struggling eurozone countries. France is central to those efforts, and the downgrade, by pushing up its own borrowing costs, could make it harder for France to help others.

Fillon said the downgrade confirmed his conservative government's plans for more reforms to bring down debts, despite worries that more austerity measures could suffocate growth.

The downgrade, coming three months before France holds presidential elections, was "an alert that should not be dramatized any more than it should be under-estimated," he said. He insisted that France is a reliable investment, The Associated Press reported.

Standard & Poor's stripped France of its coveted AAA status, knocking it down one notch to AA+. It dropped Italy even lower. Germany retained its top-notch rating, but Portugal's debt was consigned to junk.

Cyprus' finance minister called Standard & Poor's two-notch downgrade of his eurozone country to junk status "arbitrary and unfounded."