Rating agency Moody’s has issued a warning regarding France’s credit score following President Emmanuel Macron’s decision to call for snap elections. The move, prompted by the far-right’s success in the recent European Parliament elections, has raised concerns about potential political instability. The first round of legislative elections is set for June 30, with a run-off on July 7.
Moody’s stated that the snap elections pose risks to fiscal consolidation and are considered “credit negative” for the country’s rating. Given the polarized political environment, the agency believes that the future government is unlikely to have an absolute majority in parliament, potentially leading to greater instability.
France, already facing pressure to reduce its debt and deficit, has announced emergency spending cuts. While Moody’s has maintained the sovereign rating at “Aa2,” other agencies like Standard and Poor’s have downgraded it. Despite the government’s commitment to meeting EU fiscal targets by 2027, Moody’s warns that political uncertainties could impact these goals.