UK should get credit rating cut, says French bank head

0
Have your say

Anglo-French relations have taken another turn for the worse after the head of France’s central bank suggested the UK should have its credit rating downgraded.

France’s coveted AAA credit rating is under threat after two credit agencies indicated that they were considering marking down countries across the eurozone.

But Banque de France governor Christian Noyer came out fighting on Thursday and suggested Britain should lose its AAA rating first, a move that would drive up borrowing costs.

He pointed to the scale of debt and inflation on this side of the Channel, and the UK’s poor levels of growth and lending by banks.

The attack came a day after French President Nicolas Sarkozy was reported to have called David Cameron an “obstinate kid” for vetoing a treaty to rescue the euro last week.

Mr Noyer told a French newspaper that a downgrade for France “doesn’t strike me as justified based on economic fundamentals”.

“Or if it is, they should start by downgrading the UK, which has a bigger deficit, as much debt, more inflation, weaker growth and where bank lending is collapsing,” he added.

Mr Cameron’s official spokesman said: “We have a credible plan for dealing with our deficit and the credibility of that plan can be seen in what has happened to bond yields in this country.”

The spokesman also sought to quell speculation the Prime Minister was seeking to undermine an agreement between the other 26 EU states following his veto.

Mr Cameron held talks with his counterparts in non-euro states Denmark, Sweden and the Czech Republic, all of whom have raised concerns about the agreement.

The Czech Republic and Hungary said they would not join the new agreement unless plans for tax harmonisation were dropped.