French politicians are squabbling over how important Friday's downgrading by the Standard & Poor's rating agency is and who is responible. But what will it mean for ordinary French people and European institutions? And will it kill President Nicolas Sarkozy?
- France will pay more interest on state borrowing, scheduled to be 180 billion euros this year, further boosting state debt;
- Local authorities’ debts will get bigger – many owe large amounts to banks whose interest rates will go up – pushing up local taxes;
- State institutions, such as social security, will pay higher interest rates, as will companies that are all are part-owned by the state;
- Mortgages and other personal loans in France and other downgraded countries may become more expensive;
- Foreign investors, such as pension funds, may put their money elsewhere;
- Europe will have more austerity – finance ministers say they will agree a new treaty to tighten fiscal rules at the end of the month;
- Some European banks may be downgraded because their governments are seen as too risky to back them up if necessary;
- The European Financial Stability Fund - the eurozone bailout fund - could be downgraded since its rating depends on that of the six top-rated countries;
- Nicolas Sarkozy will die (electorally) - "If France loses its AAA, I'm dead," he told aides in October, according to Le Canard Enchaîné weekly.
