Moody's Downgrades France's Credit Rating to Aa3 Citing Political Gridlock

The downgrade reflects concerns over France's weakened public finances and fragmented political landscape, following the appointment of François Bayrou as Prime Minister.

Moody's lowered France's credit rating from Aa2 to Aa3 with a stable outlook, aligning it with ratings from S&P and Fitch.
The agency cited political fragmentation as a key factor, stating it undermines efforts to address fiscal deficits and public debt.
France's public debt is projected to rise from 113.3% of GDP in 2024 to approximately 120% by 2027, with deficits stagnating above 5%.
The downgrade follows a no-confidence vote that ousted Michel Barnier's government, leaving France without an approved budget for 2025.
New Prime Minister François Bayrou has pledged to prioritize fiscal responsibility, but Moody's sees little chance of significant deficit reduction in the near term.