Moody’s Revises France’s Outlook to Negative from Stable

Credit rating agency Moody’s Investors Service has revised France’s outlook from stable to negative, citing mounting fiscal pressures and deepening political uncertainty that threaten to undermine the government’s ability to manage its budget and debt challenges.

In a statement released Friday, Moody’s said the downgrade in outlook reflects “increased risks stemming from political divisions that could continue to weaken the effectiveness of France’s legislative institutions.” The agency, however, affirmed France’s long-term foreign-currency credit rating at Aa3.

The move underscores growing concerns among investors and analysts about France’s fiscal trajectory, as President Emmanuel Macron’s government faces persistent political gridlock and social unrest. Disputes over the 2025 budget and disagreements among coalition parties have complicated efforts to rein in public spending and stabilize debt levels.

Moody’s warned that ongoing political instability may hamper the government’s capacity to respond effectively to key fiscal and monetary policy challenges,  including a widening budget deficit, rising public debt, and elevated borrowing costs.

The agency’s decision comes as France’s public finances remain under strain following years of pandemic-related spending and the economic aftershocks of Europe’s energy crisis. Economists note that while the country retains a strong industrial base and diversified economy, its debt-to-GDP ratio — hovering near 110%, leaves little room for fiscal maneuver.

Analysts say that unless the government can restore political cohesion and implement credible fiscal reforms, further pressure on France’s credit profile cannot be ruled out.