MOODY has downgraded France of its
prized triple-A badge on Monday, cutting the sovereign credit rating on Europe's
No. 2 economy by one notch to Aa1 from Aaa, in view to an uncertain fiscal
outlook and deteriorating economy.
The downgrade, which follows a cut
by Standard & Poor's in January, was far and wide expected but is still a
blow to Socialist President Francois Hollande as he strives to convince the
world he can fix France's public finances and stalled economy.
Moody's
was keeping a negative outlook on France due to structural challenges and a
"sustained loss of competitiveness" in the country, where business leaders blame
high labour charges for flagging exports and underlying symptoms France's
sovereign rating is the risk to economic growth, and therefore to the
government's finances, posed by the country's persistent structural economic
challenges.
These include the rigidities in labour and services
markets, and low levels of innovation, which continue to drive France's gradual
but sustained loss of competitiveness and the gradual erosion of its
export-oriented industrial base.
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