Moody's downgrades France's credit rating to Aa3

Credit ratings agency Moody's has downgraded France's credit rating to Aa3 with a stable outlook, reported media outlets on Saturday.

"The decision to downgrade France's ratings to Aa3 reflects our view that France's public finances will be substantially weakened by the country's political fragmentation which, for the foreseeable future, will constrain the scope and magnitude of measures that could narrow large deficits," Moody's was quoted by media outlets as saying.

The downgrade came hours after French President Emmanuel Macron on Friday nominated Francois Bayrou as the country's new prime minister, succeeding Michel Barnier, who was ousted in a vote of no confidence on Dec. 4, reports Xinhua.

"Looking ahead, there is now very low probability that the next government will sustainably reduce the size of fiscal deficits beyond next year," said the rating agency.

"As a result, we forecast that France's public finances will be materially weaker over the next three years compared to our October 2024 baseline scenario," it added.