Debt: Moody's spares France, "a brief respite", not a "vote of confidence"
Despite downgrade consensus, the agency kept France's sovereign rating unchanged, a short-lived relief, say economists, warning of a debt time bomb and worsening political and social tensions.
Moody's has left France's sovereign debt rating unchanged at Aa3, despite expectations of a downgrade. The agency maintains a negative outlook, citing a budget reduction to 5% deficit by year-end as the key factor. France's borrowing rate has risen this week due to post-October riots and political uncertainty. The government is lauding the decision as recognition of its economic strength and budget credibility.
However, the downgrade remains a risk, and investors view French debt as a "pariah" due to unsustainable public finances, high inflation, and weak growth.
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