Moody's downgrades France's credit rating

International rating agency Moody's has downgraded France's credit rating to "Aa3" from "Aa2" and changed its outlook to "stable" from "negative," Report informs via Interfax.

Moody's assesses as "very low" the probability that the new government will ensure a stable reduction in the budget deficit from 2026. The agency forecasts that France's budget deficit will be 6.3% of GDP in 2025 and 5.2% in 2027.

There is a risk of a prolonged increase in financing costs, which will further reduce the availability of debt capital.

"This could create a negative feedback loop of increasing deficit, growing debt burden, and rising financing costs in conditions of significant annual borrowing needs," the agency stated.

The agency forecasts that France's public debt level will increase to approximately 120% of GDP in 2027 from 113.3% of GDP in 2024.