FX.co ★ S&P Cuts France’s Credit Rating to A+

S&P Global unexpectedly downgraded France's credit rating by one level on Friday, highlighting concerns over political instability that could jeopardize the government's financial recovery efforts. Typically, credit rating agencies do not issue unplanned downgrades, but S&P justified the reduction from 'AA-' to 'A+', accompanied by a negative outlook, following a particularly volatile political environment. The agency noted that political uncertainty is likely to negatively impact the French economy by hindering investment activity and private consumption, thus slowing economic growth. In light of this downgrade, Finance Minister Roland Lescure emphasized the shared responsibility of both the government and parliament to pass a budget before the end of the year. This budget must ensure the fiscal deficit aligns with the EU's target of limiting deficits to 3% of GDP by 2029, as reported by Reuters. Meanwhile, Moody’s has maintained France’s rating at Aa3 with a stable outlook, and DBRS continues to rate it at AA, also with a stable outlook.