France has been notified that Standard & Poor's has cut its triple-A credit rating by one notch to AA+ and will step up reforms to shore up its economy, Finance Minister Francois Baroin said on Friday.
Minutes after he emerged from an emergency meeting with President Nicolas Sarkozy, Baroin appeared on the nightly television news to announce the downgrade and try to play down its impact on the French economy.
It's a downgrade, a one-notch change, he told the France 2 television channel, adding that several other euro zone countries faced similar treatment.
Clearly, this is not a disaster. It is as if you asked a student who got 20 of 20 (grades) in school for a very long time whether dropping to 19 was a disaster. No, it's an excellent grade.
He added that the move meant that ratings agencies were punishing the euro zone as a whole for governance problems that had contributed to its debt crisis, and that France would seek to increase the pace of economic reforms.
European sources have told Reuters that downgrades of several sovereign ratings in the euro zone were imminent.
President Nicolas Sarkozy has pushed through two rounds of belt-tightening in the past half-year and is meeting unions and employers next week to discuss reforms, reduce labour costs and stem a rise in joblessness.
But critics argue that Sarkozy has waited too long to address France's chronically high unemployment rate and are doubtful that meaningful reforms can be pushed through in three months before a presidential election.
Sarkozy will always be the president of the French downgrade, Socialist Party president Martine Aubry said in a statement.
Sarkozy faces an uphill struggle for re-election in April-May as Socialist challenger Francois Hollande maintains a wide lead over him in opinion polls.
Earlier on Friday, Sarkozy said he was committed to taking strong decisions in the coming weeks to boost growth, employment and competitiveness.