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Noyer says rating firms should cut UK

Friday 16 December 2011 - by

Christian Noyer - Banque de France
Christian Noyer, the governor of the Bank of France, took the unprecedented step of saying Britain should be downgraded by credit rating agencies on Thursday.

The Frenchman pointed to the UK's high national debt, inflation and slow growth to say that his country was in a better position, and so should not first face a credit cut.

"A downgrade does not seem to me justified based on economic fundamentals," Noyer told Le Télégramme newspaper.

"[Rating agencies] should begin by downgrading the United Kingdom which has bigger deficits, more debt, higher inflation, less growth than us and where credit is shrinking."

The comments follow the downgrade of the country's three largest banks - BNP Paribas, Credit Agricole and Societe Generale - last week by ratings rival Moody's.

On Wednesday, French bank Credit Agricole saw its credit rating cut by Fitch from AA- to A+ as it said it would be cutting 2,350 jobs worldwide.

Fitch blamed the bank's "exposure to the eurozone's problems, the impact on funding of capital markets that are not functioning effectively, and only adequate capital ratios compared with highly rated peers".

In its statement last week, Moody's blamed its downgrades on "deteriorating macro fundamentals" as well as limits on bank funding. Each of the banks was given a negative outlook, indicating that Moody's believes the situation could worsen in the future.

Just hours earlier the European Banking Authority said it had identified a capital shortfall of €7.3bn across France's credit institutions, which they will have to make up to meet a new 9 per cent EU-wide capital requirement.

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