International credit rating agency Moody’s announced that the recent general elections in France had a negative impact on the country’s credit rating. The early general elections held in France on June 30 and July 7 were notable for the victory of the leftist New Popular Front. The New Popular Front became the party with the most seats, with 178 deputies.
Moody’s statement said that the political situation in France could complicate the fiscal consolidation process. It was emphasized that a large coalition government would complicate decision-making mechanisms. It was stated that this situation could make debt reduction and fiscal policy implementation even more difficult.
The statement also said that France was unlikely to increase taxes because its tax revenue-to-GDP ratio was the highest among OECD countries. It was emphasized that this situation could have a negative impact on the country’s credit rating due to the election results.
Moody’s warned that France’s credit rating outlook could be downgraded to “negative” if budget deficit and debt figures are higher than expected, and that French institutions and policy effectiveness would be tested under unique conditions.
| Credit Score | Credit Score Outlook |
|---|---|
| Aa2 | Stable |
