FRENCH President Francois Hollande was hit with yet another downgrade last night, as Moody’s took the Eurozone’s second biggest economy down a ratings peg.
In another blow to President Hollande’s fiscal policy, French government debt was cut to an Aa1 rating, from Aaa, following a similar decision from Standard & Poor’s in January. To add salt to the wound, the ratings agency maintained its negative outlook, suggesting its assessment could worsen further.
And as well as Hollande’s fiscal issues, France’s long-term problems, particularly its “gradual, sustained loss of competitiveness” were once again blamed, in line with assessments from the IMF and an independent French commission. Moody’s also expressed worries about the “disproportionately large” trade and banking linkages between France and peripheral Europe – claiming it could he susceptible to future Eurozone shocks.
But the ratings agency did express some optimism about the government’s “commitment to structural reforms and fiscal consolidation,” and said it hoped these could mitigate some of France’s deepest problems.