Crisis in France

France feels the economic force of the credit ratings agencies

As the French prepare their own austerity package the focus on the ratings agencies' role in the recession becomes more acute

Guardian

Friday 12 August 2011 17.51 BST

It was the week in which the focus of the financial crisis switched from the streets of New York and Washington to the boulevards of Paris. After roughing up the Dow Jones and Barack Obama, it was the turn of French stocks to be pummeled and for Nicolas Sarkozy to scurry back from holiday to defend his country's honour.

However, in both cases, the bogeyman was the same – the ratings agencies, whose actual downgrade of the US sparked market mayhem and whose rumoured placing of the hex on France brought the chaos back to Europe amid massive selling of shares, especially in the French banks SocGen, BNP Paribas and Crédit Agricole.

Friday's news that the French economy flatlined in the second quarter means there will be no respite from rumours that France could be the next country to follow America and be stripped of its coveted AAA-rating.

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