France rating downgrade heaps pressure on François Hollande Rating agency Standard & Poor's has cut France's sovereign credit rating by one notch to "AA," heavily criticising a government already under fire for not doing enough to cut government spending and stimulate economic growth. The move adds to pressure on François Hollande who has suffered from a tough few weeks beset by strikes from farmers in Brittany and by top professional football clubs over taxes, which are some of the highest in the western world. "The downgrade reflects our view that the French government's current approach to budgetary and structural reforms to taxation, as well as to product, services, and labour markets, is unlikely to substantially raise France's medium-term growth prospects," S&P said in a statement on Friday. "Moreover, we see France's fiscal flexibility as constrained by successive governments" moves to increase already-high tax levels, and what we see as the government's inability to significantly reduce total government spending." Separately, France's industrial output unexpectedly fell in September by 0.5 per cent from the previous month while the trade deficit worsened, raising concerns that growth in the third quarter was going to be slower than expected. Pierre Moscovici, the French finance minister, said in a statement shortly after the announcement by S&P that he "regrets the inaccurate and critical judgments made by the rating agency Standards and Poor's." He added that the move "reaffirms the determination of the entire government to follow the path already laid out to reduce the public deficit, restore competitiveness and support economic growth and employment." The government has also seen a more popular revolt over taxes in recent weeks, with a series of demonstrations by hard-pressed farmers, food industry workers, transport and other businesses in Brittany over a new "ecotax" on large vehicles. Breton farmers and other protesters wearing red bonnets - the symbol of a local 17th century tax revolt - have attacked posts set up to monitor vehicles for the tax and blocked roads with dumped cauliflowers. France's top football clubs also threatened to cancel all games for one weekend later this month, protesting against the 75 per cent income tax bracket on salaries above €1m which they said was "unfair and discriminatory" and threatened "the death of French football." Mr Hollande bowed to pressure over the ecotax, but showed no mercy to the football clubs. At 46 per cent of gross domestic product, France has one of the highest tax burdens among advanced economies. Mr Hollande, who's approval ratings have slipped to record lows in recent weeks, has acknowledged growing public intolerance of some €60bn in new taxes brought in over the past three years, heavily augmented by his own administration. Economists have also been critical of the government for not going far enough with structural reforms this year, despite claims that the administration was taking steps to make the country more competitive and reduce unemployment. "The slowdown in structural reforms in France has been particularly visible since the spring, as the government has stopped pushing through new measures to focus on pension reform and the 2014 budget," said Fabrice Montagne, economist at Barclays, following the downgrade. Both have been rather disappointing, however, leaving the reform agenda close to empty in the second half of this year and with no serious prospects of improvement before the municipal elections in May 2014. The far-right French National Front is expected to perform well in the municipal and European elections in March and May next year because of government unpopularity, with the party decisively winning a local by-election last month. On Thursday, the European Central Bank surprised markets with a 25 basis point interest rate cut, which took the benchmark lending rate across the single currency area down to a record low of 0.25 per cent. Recent official data have shown that inflation across the 17-nation bloc is running at extremely low levels. S&P was the first agency to strip France of its "AAA" rating in January last year, although both Moody's and Fitch have since also taken away the country's top rating. Following Friday's move, S&P's rating on France is now one notch below those of its two rivals. The euro fell slightly following the S&P decision, and was trading at $1.34 against the US dollar. S&P also altered its outlook for the country to "stable" from "negative," suggesting a further downgrade or a reversal of Friday's move are seen as unlikely in the next two years. It said the slowdown in taxation would help to nurture a tentative economic recovery, with growth forecast at 0.9 per cent next year, broadly in line with EU and other projections. The OECD club of rich countries recently forecast that the French economy as a whole would grow 0.3 per cent this year. The French government has targeted 0.9 per cent growth next year, roughly in line with EU estimates, but is optimistic it will do better than that. "The recovery is here," Mr Hollande declared in August.