Moody's downgrades France's credit rating to negative

Moody's announced that France's credit rating has been affirmed at "Aa3." The outlook for the credit rating has been revised from "stable" to "negative," citing the risk that political fragmentation in the country could weaken legislative processes and limit the government's ability to address fundamental issues such as the budget deficit, rising debt, and rising borrowing costs.

The statement emphasized that this situation could lead to a faster weakening of France's key fiscal indicators than currently expected.

The statement noted that political fragmentation increases the risk of reversing structural reforms, such as the suspension of the 2023 pension reform, which could undermine the country's long-term growth potential. However, it highlighted France's capacity to withstand economic shocks thanks to its rich and diversified economy, robust corporate balance sheets, and strong banking sector.

Fitch and S&P downgraded France's credit rating

France faced downgrades from credit rating agencies following increasing fragmentation and polarization in domestic politics and uncertainties regarding public finances.

In September, Fitch Ratings downgraded France's credit rating to "A+" and the country's credit outlook became "stable."

Last week, Standard & Poor's (S&P) lowered France's credit rating to "A+/A-1" and set the outlook as "stable".