French banker says UK should be downgraded first

The chairman of the French central bank, Christian Noyer, has said ratings agencies should downgrade the UK before France because its economy is weaker.

Christian Noyer heads France's central bank

US agency Standard and Poor's recently warned France its rating could suffer over the eurozone crisis and downturn.
"The downgrade does not appear to me to be justified when considering economic fundamentals," Mr Noyer said.
The British Government responded by saying the UK had a credible plan for dealing with its deficit.
Speaking to French regional newspaper Le Telegramme, Mr Noyer said any downgrade should start with Britain "which has more deficits, as much debt, more inflation, less growth than us and where credit is slumping".
Britain was not identified as a credit risk by Standard and Poor's in its report earlier this month.
The spokesman for UK Prime Minister David Cameron said: "Credit ratings are a matter for credit rating agencies but we've put in place a credible deficit reduction plan and you can see that credibility in the UK's bond yields."
There is a sense of frustration across the eurozone that last week's summit in Brussels seems to have done little to calm the financial markets, the BBC's Chris Morris reports.

Analysis

Chris Morris BBC News, Brussels

There is a sense that the markets are waiting for a decision from the ratings agencies on whether France will lose its cherished AAA credit rating. French ministers have already said it would be regrettable, but not disastrous.
For a central banker, these are rather extraordinary comments, but Mr Noyer also said the agencies had become incomprehensible and irrational.
It is another sign of the sense of frustration across the eurozone that last week's summit seems to have done little to calm the financial markets. Already there are political disputes brewing about the proposed new treaty which all EU member states except Britain have agreed to consider.
Part of the problem is that there is no draft treaty text yet - it is due to emerge early next week. After that, intensive consultations will begin, with the aim of reaching a political agreement on the details of the treaty at yet another EU summit in late January or early February.

Relations have been strained between France and Britain, which vetoed changes to the Lisbon Treaty that would have allowed for closer economic integration.

Hungary and the Czech Republic raised concerns on Thursday about the plans for a closer fiscal union, saying they should apply only to eurozone states.
Loss of the top credit grade would have serious economic implications for France, increasing the interest rate it paid for new state borrowing.
Mr Noyer accused ratings agencies of putting at risk "the positive feeling that existed on the markets the day after the Brussels summit".
In the French parliament, Finance Minister Francois Baroin poked fun at Britain, saying the fiscal pact had been backed by every country in Europe, "with the singular, now solitary, exception of Great Britain, which history will remember as marginalised".
"Great Britain is in a very difficult economic situation, a deficit close to the level of Greece, debt equivalent to our own, much higher inflation prospects and growth forecasts well under the eurozone average," he said.
"It's an audacious choice the British government has made."

source: BBC

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