France loses top rating in blow to Hollande
FRANCE has lost its top credit rating with Moody's Investors Service, dealing a blow to President Francois Hollande's efforts to show budget credibility in the face of a stalled economy.
France was cut to Aa1 from Aaa, the rating company said today. The Moody's downgrade follows one by Standard & Poor's in January and increases pressure on Mr Hollande to find ways to bolster growth in Europe's second-largest economy in the midst of the region's three year-old debt crisis.
Moody's said its decision to downgrade the rating and maintain the negative outlook reflects France's long-term economic growth outlook is negatively affected by multiple structural challenges and the fiscal outlook is uncertain as a result of its deteriorating economic prospects.
Since taking office in May, Mr Hollande has pressed Germany to do more to end the debt crisis, while focusing on tax increases at home to pare France's budget shortfall. Last month, his government has set out 20 billion euros in new levies on the rich and big companies that are intended to reduce the deficit to 3 per cent of gross domestic product next year.
Buffeted by the European Central Bank's offer to help finance struggling governments under certain conditions, Mr Hollande has so far received support from his investors even after the S&P downgrade.
Read more at Brisbanetimes.com.au