French PM: Spat with UK 'smoothed over'

2011-12-20 13:01

Paris - French Prime Minister Francois Fillon backtracked on Monday on his earlier remarks criticising the state of Britain's economy, saying a resulting disagreement with London had been "smoothed over".

London and Paris clashed on Friday after Fillon and French Finance Minister Francois Baroin said that Britain's debt and deficit levels were worse than those of France, whose AAA credit rating was placed on negative outlook by Fitch the same day.

The remarks prompted British Deputy Prime Minister Nick Clegg to tell Fillon his criticism was unacceptable, and to appeal for a cooling of bilateral tensions.

The move came after British Prime Minister David Cameron vetoed a treaty on euro zone fiscal integration last week at a summit in Brussels.

"I think the disagreement has been perfectly smoothed over," Fillon told reporters. "My comments were not targeting Great Britain or the quality of the British government's financial policies."

"I simply wanted to emphasise that the way in which the credit agencies and the markets judge the situation of euro zone countries is more linked to the euro zone's governance and the difficulties of the euro zone in reacting to the crisis because of its political organisation than to the level of debt and deficits."

Adding to recent criticism of credit ratings methodologies by French authorities, presidential advisor Henri Guaino told Les Echos newspaper in an interview due to be published on Tuesday that the loss of France's AAA would be "totally unjustified".

Britain, which has embarked on tough austerity policies to curb a big budget deficit, retains a top-notch credit rating.

The criticism has not been just one way. Writing in the London Evening Standard newspaper last month, British Finance Minister George Osborne said France had failed "to get ahead of the curve" with tackling its deficit, unlike Britain.