'No austerity' in wake of downgrade

France does not see a need to launch further austerity measures as a result of losing its top-notch AAA rating with Standard &…

France does not see a need to launch further austerity measures as a result of losing its top-notch AAA rating with Standard & Poor's, the country's Finance Minister Francois Baroin  told a German newspaper.

"We are confident the measures already undertaken will be enough to reach the goals for reducing the public deficit in 2012," Frankfurter Allgemeine Zeitung quoted Mr Baroin as saying.

"Thus there will be no new measures toward budget consolidation," he said, adding that Paris would concentrate on structural reforms to improve competitiveness, including a lowering of labour costs.

S&P downgraded the credit ratings of nine euro zone countries on Friday, with France and Austria stripped of their coveted triple-A status.

READ MORE

Baroin also said in the paper that the downgrades would not prevent Europe from speeding up the launch of its permanent bailout fund, the European Stability Mechanism (ESM) this year.

"Such an acceleration is possible, without altering the financial balance of France substantially," he said, adding that he was confident that in the meantime the existing European Financial Stability Facility bailout fund would operate unhindered by the downgrades.