Moody’s Ratings downgraded France’s credit rating after local far-right leader Marine Le Pen toppled the country’s government as part of a dispute over reducing the public’s budget deficit.
The mentioned agency lowered its assessment of the French economic system to Aa3 from Aa2. The current indicator is three levels below the maximum rating. It is worth noting that nowadays France’s economic system is the second largest in the eurozone.
Fitch and S&P also downgraded the mentioned country’s rating to a level similar to that provided by Moody’s assessment.
In a statement, Moody’s noted that the decision regarding France reflects the view that the country’s public finances will be substantially weakened in the coming years. Also in this context, it was underlined that there is a very low probability that the next government in Paris will sustainably reduce the size of the fiscal deficit beyond the next year.
The mentioned statement was released shortly after French President Emmanuel Macron appointed Francois Bayrou as the fourth prime minister in a year. The previous prime minister, Michel Barnier, was ousted in a confidence vote last week. This happened after Le Pen’s National Rally lined up alongside left-wing parties to protest against his plans to narrow France’s budget deficit.
The outgoing finance minister of the country Antoine Armand said that the downgrade reflects recent parliamentary developments and uncertainty around the budget.
The government collapse and the scrapping of next year’s budget exacerbate the months-long political upheaval in France, which has already harmed business confidence. Also, against this background, the economic prospects of Paris are generally deteriorating.
As we have reported earlier, Moody’s Downgrades New York Community Bancorp.
