France’s election outcome “negative” for credit rating – Moody’s

LONDON (Reuters) – The outcome of France’s parliamentary election is negative for the country’s credit rating, Moody’s (NYSE:) has warned, as a grand coalition would make key economic decisions highly complex.

“In light of the constraints that any future government faces, we are unlikely to see expenditure-based fiscal consolidation in 2025,” Moody’s said in a note on the election result which resulted in a hung parliament.

Given that France’s tax-to-GDP ratio is already the highest in the OECD, a new government is also unlikely to be able to push through further tax hikes, the agency, which currency rates France Aa2 with a “stable” outlook, added.

“Hence, the fiscal implications of the election outcome are credit negative,” the company said.