Moody's has maintained France's Aa3 credit rating with a negative outlook, providing a surprise reprieve to President Emmanuel Macron's government amid soaring bond yields, political gridlock and nationwide protests. The agency cited expectations of a deficit-reducing 2027 budget and easing social tensions as reasons for avoiding a downgrade, though it warned conditions are worse than previously expected.
France's debt burden has reached nearly 120 per cent of GDP, with 10-year bond yields hitting 5 per cent for the first time since 2002. The government faces a parliamentary battle to pass its 2027 budget featuring €43bn in cuts and tax rises to rein in the deficit to 5 per cent of GDP, with opposition dismissing the plan as too harsh.
Prime Minister Sébastien Lecornu hailed the rating decision as defying expert pessimism, emphasizing the need for a balanced budget by year-end. Moody's projects France's deficit at 5.2 per cent for 2027, warning that weaker growth and political challenges could impede fiscal consolidation.
Source: Financial Times Markets · Summarized by HeadlinesBriefing