Moody's holds France's credit rating steady despite budget and political uncertainty

Moody's maintained France's sovereign debt rating at Aa3 on Friday following a periodic review, despite the rating having carried a negative outlook since last October. Le Monde English reports that this decision defied many economists' forecasts and differed from the harsher assessments provided by Fitch and S&P. Free Malaysia Today notes that bond markets had been pricing in a downgrade that would have aligned Moody's with those other agencies.

The Aa3 rating is contingent upon the adoption of a deficit-reducing budget for 2027 and the assumption that social tensions and financing costs will abate in the coming months, according to Moody's. The French finance ministry stated the unchanged rating reflects the credibility of the 2027 finance bill, which aims to put public finances on a path to recovery.

Free Malaysia Today reports the government faces difficulties passing this bill in a parliament where opposition parties could potentially reject the legislation or topple the government via a no-confidence vote.

Separately, France and the United Arab Emirates have revived plans to jointly develop an upgraded Rafale fighter jet. According to Hindustan Times - World News, President Emmanuel Macron agreed to deepen a strategic defence agreement with UAE President Sheikh Mohammed bin Zayed al-Nahyan to establish a common strategy for the Rafale's fifth generation. The 2027 draft budget earmarks €3 billion for this project.

Brief written by urgent.news from Le Monde English, Free Malaysia Today, Hindustan Times - World News — 3 reports on this story. Machine-written — may contain errors; check the original before relying on it.