When Standard and Poor’s downgraded France’s credit rating to AA+ on 13 January it triggered turmoil on the French political scene. Initially a pure economic indicator, sovereign ratings are becoming ammunition in the battle for the presidency.
Last August, the Triple A was described as a “national good/treasure” by Alain Minc, Sarkozy’s economic advisor. Later on, the Secretary General of the Elysée, Xavier Muscat, said: “If we lose it, we’re dead”. Unsurprisingly, the French President’s first reaction to the downgrade has been to minimise the importance of the decision: ongoing economic reforms are underway; S&P has got its facts wrong, just look at Fitch and Moody’s maintenance of the AAA; and the credit rating agencies have no legitimacy in the democratic process anyway. But the lasting image is surely Sarkozy’s extraordinary response to a Reuters journalist in Madrid, when pressed about the downgrade he said: “I don’t understand your question…what downgrade?”
For his main rival, François Hollande, this is surely his moment. He is holding Sarkozy to account for the downturn, and presenting the downgrade as a symbolic failure of his Presidency. Hollande hopes that this might kick start his own stuttering campaign, rally the left wing faction of his party and put him in pole position to take out Le Pen or Sarkozy in the first round of the 2012 elections. The creation of a European credit rating agency and amending MIFID is now at the core of his program.