Ratings agency Moody’s recently downgraded France’s outlook, indicating a possible credit rating cut. The agency cited concerns over the country’s finances, expressing worry about the government’s ability to address budget deficits and debt affordability issues.
Despite lowering France’s outlook to “negative,” Moody’s kept its credit rating at Aa2, acknowledging the country’s strong economic foundation. This move comes as France’s fiscal situation deteriorates, contrasting with efforts in similar-rated countries to improve public finances.
New finance minister Antoine Armand acknowledged the challenges but remains confident in France’s ability to enact reforms and restore financial stability. Moody’s highlighted political and institutional risks in France, emphasizing the need for effective policy measures to improve budget management.
Prime Minister Michel Barnier aims to reduce the public sector deficit, with plans to bring it below the EU-mandated limit. Despite facing opposition, the government is committed to addressing the rising debt levels and implementing necessary reforms.
With Fitch Ratings also revising France’s outlook to “negative,” the country faces significant challenges ahead to strengthen its financial position.