For the first time, the Czech Republic has the same rating as France. Only five eurozone countries have better ratings
For the first time, the Czech Republic has the same rating as France. Only five eurozone countries have better ratings
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> For the first time in history, the Czech Republic has the same credit rating as France. The world’s leading agency Fitch downgraded France, the eurozone’s second largest economy. The reason for this is the size of France’s projected budget deficits this year and next. These deficits are already too far above the median level of deficits reported by the group of countries in which Fitch has so far placed France, i.e. the group of countries rated ‘AA’. It is therefore now giving France a one-notch worse rating, ‘AA-‘.
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> Politically, this is a major blow to President Emmanuel Macron, who is now trying to stabilise French public finances with unpopular reforms, including extending the retirement age.
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> For the first time in history, France has the same credit rating as the Czech Republic. In other words, for the first time in history, the Czech Republic has “caught up” with France in terms of its credit rating. Given the rate at which France’s rating has deteriorated over the last 20 years or so, and given that the Czech Republic’s rating has improved somewhat over the same period, it is not inconceivable that the Czech Republic will soon surpass it in terms of its rating.
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> According to Fitch, only five of the twenty eurozone countries now have a better rating than the Czech Republic. These are Germany, Austria, the Netherlands, Luxembourg and Finland. Never in history have so many eurozone countries had a rating equal to or worse than the Czech Republic’s, which puts another question mark over the merits of the Czech Republic joining the eurozone. It can no longer be spoken of much as an elite club. On the contrary, the debt burden of this monetary union is steadily increasing, and the direct costs associated with this would be borne by the Czech Republic if it were to adopt the euro.
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> However, the Czechs in particular should not be scared into thinking that they are heading for bankruptcy, when no one among the experts on the world stage actually thinks so. On the other hand, it is necessary to gradually put public finances in order so that we do not lose our still relatively improving global position. Perhaps the consolidation package that the government will present in May will make a significant contribution to this. It has a unique opportunity to cut spending substantially.
You could have put “credit” in the title…multiple times…pretty simple.
Mark my words: just like most of the other German “satellites” (Austria, Switzerland, the Netherlands, Denmark, Luxembourg), Czechia will be more prosperous per capita than Germany in 2040.