European countries have seen public debt rise almost continuously since the 1970s.

Moody's assessed that this snap election would increase risks to fiscal consolidation, calling it a "negative point" in its rating of France's credit rating, currently at Aa2.

Compared to Fitch and S&P Global, Moody's is maintaining France's credit rating one notch higher.

Moody's stated that France's public debt burden has reached the equivalent of more than 110% of its Gross Domestic Product (GDP), higher than other countries with similar ratings. France's public debt has increased almost continuously since the 1970s due to persistent budget deficits.

The French economy faces significant risks. Photo: AP

According to Moody's, the risk of political instability is considered a credit risk because the succeeding government would also inherit a challenging fiscal position.

The agency also left open the possibility of lowering France's credit rating outlook from "stable" to "negative" if the country's public debt charts continue to deteriorate. Moody's also suggested that once the commitment to strengthening finances weakens, pressure to reduce creditworthiness will increase.

Previously, S&P Global Ratings downgraded France's credit rating from "AA" to "AA-", citing a deterioration in the country's fiscal position.

This is the first time since 2013 that S&P has downgraded the credit rating of the European Union's second-largest economy.

S&P made this decision because France's budget deficit is projected to remain above 3% of GDP by 2027.

S&P stated that the European nation's budget deficit in 2023, at approximately 5.5% of GDP, is higher than the agency's previous forecast. Meanwhile, public debt could also go against expectations, rising to around 112% of GDP by 2027, from approximately 109% of GDP in 2023.

Analysts believe that the downgrade of France's credit rating could make investors less interested, leading to greater difficulties in the country's debt repayment.

However, S&P also maintained a "stable" outlook for France based on "expectations that real economic growth will accelerate and support strengthening of the government budget," although not enough to reduce the country's high debt-to-GDP ratio.

Source: https://congthuong.vn/quoc-gia-chau-au-co-no-cong-tang-gan-nhu-lien-tuc-ke-tu-nhung-nam-1970-325645.html