During the night from Friday to Saturday, the rating agency Moody's announced the downgrade of France's sovereign rating, going from Aa2 to Aa3, with a stable outlook. This decision comes in a turbulent political context, marked by the appointment of François Bayrou as new Prime Minister after the censure of his predecessor, Michel Barnier, by Parliament on December 4.
In its press release, Moody's justifies this decision by the deterioration of the outlook for French public finances, estimating that increasing political fragmentation will make significant budgetary consolidation difficult. The agency had already expressed its concerns at the end of October by placing France's rating on a negative outlook. She also reported, on the day of Michel Barnier's censorship, that this parliamentary event was “negative” for the country's financial credibility.
Everything will depend on the effectiveness of the reforms
Moody's also suggested that the effectiveness of planned budget reforms will largely depend on the government's ability to overcome parliamentary deadlocks and ease current uncertainties. The resigning Minister of Economy and Finance, Antoine Armand, quickly reacted, declaring “to take note” of Moody's decision.
In a press release, he explained that this deterioration reflects the uncertainties generated by recent parliamentary events and the current political situation. However, he assured that the appointment of François Bayrou and the new government's clear commitment to reducing the public deficit constitute an appropriate response. For his part, François Bayrou, during his handover speech on Friday afternoon, underlined the absolute priority he gives to reducing the debt and public deficit.
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