Anglo-French relations hit a new low yesterday as the head of France’s central bank made an extraordinary call for the UK to be stripped of its gold-plated sovereign credit rating.
Christian Noyer’s attack follows President Nicolas Sarkozy’s cold-shouldering of David Cameron at last week’s Brussels summit, after the UK Prime Minister vetoed treaty changes to tackle the region’s sovereign debt crisis.
Fears over the exposure of France’s banks to Europe’s strugglers has seen the nation’s own triple-A rating come under threat from Standard & Poor’s, but Mr Noyer said the UK should be first to suffer at the hands of the ratings agencies.
He told a French newspaper: “A downgrade 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, weaker growth and where bank lending is collapsing.”
Mr Noyer’s cross-Channel swipe is the latest shot in a diplomatic row between the old enemies after George Osborne’s recent claims that markets were ready to turn on France – triggering fury in Paris. But bond markets have given their own, much different verdict in recent weeks with Britain’s benchmark cost of borrowing at 2.1 per cent yesterday, well below France’s 3.1 per cent.
A government spokesman said: “We have put in place a credible plan for dealing with the deficit and the credibility of that plan can be seen in what’s happened to bond yields in this country.”
Mr Sarkozy, who faces elections next year, has sought to shore up France’s public finances with tax hikes and spending cuts although he trails his Socialist rival heavily in the polls.
But France’s credit quality has come under scrutiny since mid-October when the ratings agency Moody’s said its financial strength had been sapped by the eurozone crisis, prompting Mr Sarkozy to unveil another €18.6 billion (£15.6bn) in austerity measures to slash the country’s deficit to 3 per cent of GDP by 2013.