Moody's hands France surprise downgrade over deteriorating finances

14/12/2024 12:18

Credit ratings agency Moody's unexpectedly downgraded France's rating on Friday, adding pressure on the country's new prime minister to corral divided lawmakers into backing his efforts to rein in the strained public finances.



The downgrade, which came outside of Moody's regular review schedule for France, brings its rating to "Aa3" from "Aa2" with a stable outlook for future moves and puts it in line with those from rival agencies Standard & Poor's and Fitch.



It comes hours after President Emmanuel Macron named on Friday veteran centrist politician and early ally Francois Bayrou as his fourth prime minister this year.



His predecessor Michel Barnier failed to pass a 2025 budget and was toppled earlier this month by left-wing and far-right lawmakers opposed to his 60 billion euro belt-tightening push that he had hoped would rein in France's spiraling fiscal deficit.



The political crisis forced the outgoing government to propose emergency legislation this week to temporarily roll over 2024 spending limits and tax thresholds into next year until a more permanent 2025 budget can be passed.