European country with public debt rising almost continuously since the 1970s

Moody's said the early election would increase risks to fiscal consolidation, calling it a "minus point" in its assessment of France's credit rating, currently at Aa2.

Moody's is maintaining France's credit rating one notch higher than Fitch and S&P Global.

Moody's said France's public debt burden has reached the equivalent of more than 110% of its gross domestic product (GDP), higher than other countries with similar ratings. France's public debt has risen almost continuously since the 1970s due to persistent budget deficits.

The French economy faces great risks. Photo: AP

According to Moody's, the risk of political instability is considered a credit risk because the successor government will also inherit a challenging fiscal position.

The agency also left open the possibility of cutting France's credit rating outlook from "stable" to "negative" if the country's debt charts continue to deteriorate. Moody's also said that if the commitment to fiscal consolidation weakens, the pressure to reduce credit capacity will increase.

Earlier, rating agency S&P Global Ratings downgraded France's credit rating from "AA" to "AA-", citing the country's deteriorating fiscal position.

This is the first time since 2013 that S&P has downgraded the credit rating of the European Union's (EU) second largest economy.

S&P made the decision as France's budget deficit is forecast to remain above 3% of GDP in 2027.

S&P said the European country's budget deficit in 2023, at about 5.5% of GDP, is higher than the agency's previous forecast. Meanwhile, public debt could also go against the forecast, rising to about 112% of GDP in 2027, from about 109% of GDP in 2023.

Analysts say that France's downgraded credit rating could make investors lose interest, making it more difficult for the country to repay its debt.

However, S&P also maintained a "stable" outlook on France based on "expectations that real economic growth will accelerate and support government fiscal consolidation," although not enough to reduce the country's high debt-to-GDP ratio.

Source: https://congthuong.vn/quoc-gia-chau-au-co-no-cong-tang-gan-nhu-lien-tuc-ke-tu-nhung-nam-1970-325645.html