Moody's moves towards downgrading French AAA rating
Exactly one month after France was downgraded from a coveted triple A by rating agency S&P, Moody’s has put the country on ‘negative outlook’ alongside Great Britain and Austria while Italy, Spain and Portugal were among the eurozone nations to have their credit ratings lowered.
The rating agency says the negative outlook for France, which means there is a 30 per cent chance it will be downgraded over the next 18 months, is due to the continued worsening of public debt.
It says there are significant doubts over whether the government can successfully manage its sovereign debt and reverse the downward trend.
Finance minister Francois Baroin says the Moody’s announcement is a “confirmation” that France still has a AAA rating of its sovereign debt.
He said the negative outlook reflected the economic situation in the eurozone as a whole and insisted the government would continue its policies to promote growth and productivity.
With just 70 days to go before the first round of the French presidential election, the announcement is not good news for President Nicolas Sarkozy who is trailing Socialist Party candidate Francois Hollande in opinion polls.
The opposition blames Sarkozy for the country’s current economic crisis.
Meanwhile, Britain's finance minister defended his government's deep public spending cuts on Tuesday after Moody's said the country risked losing its AAA credit rating.
George Osborne, the Chancellor of the Exchequer, insisted the assessment justified the austerity measures being implemented by the Conservative-Liberal Democrat coalition government, aimed at reining in Britain's budget deficit.