WSJ says French Government notified of a I notch credit downgrade by S&P

This cut will affect the funds available to the EFSF, but more significantly for the euro in the longer term, the funding for the ESM which is now supposed to begin on 1st July, see here.

French Finance Minister Baroin joins attack on Britain's economy.

France 24 has the report, together with much of Britain's MSM, linked here.

Banque de France Chief Noyer suggests downgrade for Britain

The Belfast Telegraph, linked here, has the latest news on the growing spat between Britain and France, the opening paragraphs of which are quote herewith:

France's Central Bank chief Christian Noyer has signalled that Britain may be in line for a credit rating downgrade.
His comments, which come a day after President Nicolas Sarkozy was quoted as branding David Cameron an "obstinate kid" for refusing to sign up to a treaty to rescue the euro last week, are certain to further heighten tensions between London and Paris.
France is bracing itself for the potential loss of its coveted AAA rating after two credit agencies last week indicated they were considering marking down countries across the eurozone.
But Banque de France governor Christian Noyer said they should instead be looking at the UK because of the scale of debt and inflation and the poor levels of growth and bank lending on this side of the Channel.
Mr Noyer told Le Telegramme newspaper that a downgrade for France - which would drive up the interest Paris pays to borrow and make loans in the wider economy more expensive - "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, more inflation, weaker growth and where bank lending is collapsing," he added.

Read more: http://www.belfasttelegraph.co.uk/news/local-national/uk/french-bank-chief-noyer-signals-uk-rating-downgrade-threat-16091505.html#ixzz1gc1KNC2T

How the EFSF and ESM will be hit by the coming European rating downgrades.

There is much on this topic already posted on this blog but the update from FT Alphaville is more than timely, linked here.

France and funding the EFSF once AGAIN!

As repeatedly pointed out on this blog, over many months, there are insufficient AAA rated Euro Zone nations to allow much, if any, boosting of the EFSF, let alone the eventual ESM. Rather than repeat old links to postings again and again, try this new one to Acting Man, from which comes the following quote:

The problem we want to focus on here is however the danger posed by a possible downgrade of France's current 'AAA' credit rating. This rating is absolutely essential to support the EFSF. And yet, if France should now give large additional guarantees to the EFSF, the mere fact of issuing said guarantees could be sufficient grounds for the credit rating agencies to downgrade France's rating – which in turn would then make the guarantees worth much less. In fact, it is very much conceivable that following a downgrade of France, the EFSF itself could also lose its current AAA rating – and this would deal a devastating blow to the entire bailout project.

As it were, S&P has already warned several weeks ago that an enlargement of the EFSF would likely 'lead to rating action'. France's public debt to GDP ratio is  nearly at 86%, so it is clear that the country would be in the crosshairs of the rating agencies. The big surge in CDS spreads on France over recent months and the recent large jump in yields on the French government's bonds  represent a big warning sign, as quite often the rating agencies will simply validate the market's assessment with a lag.