Overview
- Moody’s left France at Aa3 but cut the outlook to negative, a warning that a downgrade is more likely after recent rating cuts by S&P and Fitch.
- The agency said rising political fragmentation and delayed reforms are straining policy credibility and weakening France’s growth prospects.
- Moody’s cautioned that pausing the plan to lift the minimum retirement age from 62 to 64 would intensify fiscal pressures and lower potential growth.
- Finance Minister Roland Lescure said the move underscores the need for a budget compromise and reaffirmed targets to reduce the deficit to 5.4% of GDP in 2025 and below 3% by 2029.
- France’s public debt stands near €3.3 trillion with a debt ratio around 114% of GDP, and the OAT–Bund spread has widened to as much as 89 basis points from under 50 before the snap election.