No downgrade for France

Contrary to what you might have thought over the past week or two, every country in Europe isn’t in danger of an imminent downgrade.

So says Standard & Poor’s, which affirmed France’s triple-A rating Thursday. The rating agency cited French belt-tightening progress and a political environment that it says is “stable and oriented toward prudent economic policies.”

France will always have Paris

The rating agency said it expects the economy to grow slowly but surely in 2010 and 2011, predicting roughly 1.7% output growth in both years. The growth should allow the country to bring its deficit down to a shade over 6% by 2013, S&P said.

Gross government debt will inch up to 86% next year from around 83%, it said, but government cutbacks including a rise in the retirement age for government workers should help ease the benefits burden in coming years.

The move comes on the same day Fitch downgraded Portugal, which has been under attack in the bond markets amid questions about its ability to grow its way out of a deep recession, and after Moody’s took or warned of rating actions against Spain, Portugal, Ireland and Greece.

All sorts of indicators are pointing towards yet another euro zone crisis of some sort in the New Year, and for now the big disagreement is how big it will be and how resolute policymakers will be in response.

Thursday’s S&P move says France will be a bailout funder rather than a recipient, though considering the scale of the turbulence ahead it’s not clear how much consolation that actually will end up being for French taxpayers.

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