Moody's Downgrades France's Outlook to 'Negative'

Moody's Investors Service has revised France's outlook from 'Stable' to 'Negative', citing increasing risks stemming from political division that could adversely affect the effectiveness of legislative institutions. The agency maintained France's sovereign credit rating at 'Aa3'. This adjustment reflects concerns over rising borrowing costs and mounting budgetary pressures, necessitating improvements in the government's financial condition and the implementation of reforms.

Moody's warned in a statement that political instability may hinder the French government's ability to address challenges related to monetary and fiscal policies, such as rising budget deficits, increasing debt levels, and escalating borrowing costs. The shift in outlook to 'Negative' indicates a heightened risk of downgrading the rating further if negative factors persist without improvement. In another context, Standard & Poor's reported that French economic activity contracted in September at the fastest pace since April, with the composite Purchasing Managers' Index (PMI) registering 48.4 points, indicating a contraction. The manufacturing PMI fell to 48.1 points, while the services PMI decreased to 48.9 points, reflecting weak demand.