France faces credit rating downgrade
S&P Global unexpectedly downgraded France’s credit rating, citing political instability as a threat to the government's efforts to stabilize its finances. The downgrade affects the euro zone’s second-largest economy.
Credit ratings agencies rarely announce downgrades outside of scheduled updates, but S&P said France’s cut to A+/A-1 from AA-/A-1+ was merited after a high-tension week in which Prime Minister Sebastien Lecornu pledged to suspend a deeply unpopular 2023 pension reform and faced two votes of no-confidence, News.Az reports citing foreign media.
“We expect policy uncertainty will affect the French economy by dragging on investment activity and private consumption, and therefore on economic growth,” the ratings agency said in a statement on Friday.
Lecornu survived the two no-confidence votes in parliament on Thursday, but the reprieve for his days-old government came at the price of sacrificing President Emmanuel Macron’s signature pension reform in order to win support from Socialist lawmakers.
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