Overview

• 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.