Moody’s ratings agency downgraded France’s credit rating, increasing pressure on the recently appointed prime minister to rein in the country’s public finances.
The demotion came just hours after French President Emmanuel Macron nominated centrist François Bairou as the fourth prime minister since the fall of Michel Barnier. Barnier was toppled last week by left-wing and far-right lawmakers opposed to a debt-cutting push he had hoped would rein in the burgeoning budget deficit in the euro zone’s second-largest economy.
Moody’s downgraded France’s credit rating from Aa2 to Aa3 in a statement. The downgrade “reflects our view that France’s public finances will be significantly weakened in the future,” it said. France’s rating has already been downgraded to parity by Standard & Poor’s and Fitch.
“Political divisions are more likely to impede meaningful fiscal consolidation in France,” Moody’s said in a statement. “It is now very unlikely that the next government will continue to reduce the fiscal deficit beyond next year.”
Moody’s downgraded its outlook for France to negative in late October due to concerns about the country’s debt and deficit. The rating agency noted that “there is an increasing risk that the French government will be unable to implement measures to prevent a wider-than-expected budget deficit and a decline in debt servicing capacity.”
