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Eurozone: France downgraded to Aa2 by Moody’s - BBH

FXStreet (Delhi) – Research Team at BBH, note that the rating agency downgraded France’s rating to Aa2 and changed the outlook to stable from negative, completing the cycle by citing the weak growth and institutional and political challenges.

Key Quotes

“Moody's also recognized that France's debt is unlikely to be reduced over the remainder of the decade. The significance of the downgrade is its reminder that France continues to lag behind Germany. This gap makes the other EMU challenges more difficult.”

“The Socialist government has adopted the UMP (now Republican) program of tax cuts, reductions in social charges (~50 bln euros over three years), cut spending and adopt reforms aimed at making it easier to hire and fire employees.”

“Among its successes, France's Finance Minister Sapin cites the cut in spending from 56.4% of GDP in 2014 to 55.1% next year. Nevertheless, the budget deficit that is projected to be 3.8% of GDP this year is not projected to fall to the 3% Stability and Growth Pact mandate until 2017.”

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