Belfast Telegraph

French bank boss calls for UK credit downgrade

By Andrew Woodcock

The head of France's central bank has lashed out at the UK in an extraordinary attack which questions the region's credit worthiness.

Banque de France governor Christian Noyer said credit ratings agencies should be looking at the UK because of the scale of debt and inflation and the poor levels of growth and bank lending on this side of the Channel.

France itself faces the potential loss of its coveted AAA rating after two credit agencies last week indicated they were considering marking down countries across the eurozone.

Noyer's comments came a day after President Nicolas Sarkozy was quoted as branding David Cameron an "obstinate kid" for refusing to sign up to a treaty to rescue the euro last week.

Mr Noyer told Le Telegramme newspaper that a downgrade for France - which would drive up the interest Paris pays to borrow and make loans in the wider economy more expensive - "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.

Downing Street responded with restraint. Mr Cameron's official spokesman said: "We have put in place 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 played down suggestions the Prime Minister was seeking to undermine the agreement secured between 26 EU states at last week's summit in Brussels after he used his veto to block a treaty involving all 27.

Mr Cameron has promised the UK will "engage constructively" in talks getting under way in Brussels on the implementation of the "fiscal compact" devised by France and Germany, which was agreed in principle by the 26 last Friday.

Over the past few days, Mr Cameron has spoken to his counterparts in non-euro states Denmark, Sweden and the Czech Republic, all of whom are said to have concerns about the compact, as well as with Ireland's Enda Kenny, who has warned he may have to put it to a referendum.

The PM assured Tory MPs at a meeting of backbenchers last night that the eurozone row was not a matter of "26 to one", sparking speculation he might be seeking allies in a bid to exert UK influence over the ongoing talks.


Nations who voted for last week's euro treaty, leaving the UK on its own