France’s Economy is in jeopardy. International rating agency Moody’s has downgraded France’s credit rating to "Aa3" from "Aa2." Besides, the agency revised its outlook from "stable" to "negative."

This decision was made ahead of an anticipated worsening of the situation amid political fragmentation. France’s public finances are expected to deteriorate significantly. Moody’s assesses the likelihood of a stable reduction in the budget deficit as "very low." The agency believes that the new French government is unlikely to achieve any progress on this issue. Meanwhile, the country’s budget deficit is projected to reach 6.3% of GDP next year.

In the current scenario, France’s national debt could experience a significant rise: it might reach 120% of GDP by 2027. This year, the figure stands at 113.3%.

Earlier this December, the country’s parliament issued a vote of no confidence in Prime Minister Michel Barnier’s cabinet, after he attempted to pass the social sections of the 2025 state budget without parliamentary approval. Reports had already indicated difficulties with France’s budget. Ministers sought to replenish it by raising taxes. Following this, President Emmanuel Macron urgently sought a new prime minister, appointing François Bayrou, leader of the centrist Democratic Movement party. However, left-wing policymakers, who hold the majority in the National Assembly, are unhappy with this appointment. They are ready to push for the resignation of the newly-appointed premier.