Moody's changed France's credit rating outlook to negative.

Moody's Warning on France's Credit Rating

The international credit rating agency Moody's confirmed France's credit rating at "Aa3" but announced that it has changed the outlook from "stable" to "negative." This change arises from political uncertainties weakening legislative processes and increasing risks regarding the government's capacity to address issues such as budget deficit, rising debt burden, and increasing borrowing costs.

France's Economic Indicators at Risk

The statement emphasized that this situation could have negative impacts on France's key financial indicators and could lead to a faster-than-expected deterioration in economic performance. Additionally, political fragmentation was noted to increase the risk of rollbacks on structural reforms such as the 2023 pension reform, which could adversely affect the country’s long-term growth potential.

Other Credit Rating Agencies Have Also Downgraded

Increasing fragmentation and polarization in domestic politics, along with uncertainties surrounding public finances, have led to credit downgrades by rating agencies for France. In September, Fitch Ratings downgraded France's credit rating to A+ and kept the credit rating outlook "stable." Furthermore, Standard & Poor's (S&P) recently lowered France's credit rating to A+/A-1 and also assigned a "stable" outlook.