By Marco Hugo Barsotti MHB 
You are listening to a new special from am1575news, Francia24 and Radio Centrale Milano, in podcasting and on medium waves.
Moody’s verdict comes as a sigh of relief, but with a note of strong caution. The rating agency decided to keep the French debt rating unchanged at Aa3, confirming the quality of the tricolor bond despite the negative outlook. This is a result that allows France to retain its last double-A grade, distinguishing itself from other major agencies like Fitch and S&P which had already downgraded the country to the A plus level.
However, this stability is not without shadows. Economy Minister Roland Lescure interpreted this decision as a recognition of the strength and diversity of the French economy, but immediately issued a very severe warning. According to the government, Moody’s decision serves to warn anyone attempting to vote on an out-of-control budget or to fuel political chaos.
The deficit challenge and fiscal management
The economic landscape remains complex and characterized by strong uncertainties. Forecasts indicate a deficit that will exceed 5.4 percent of GDP, with public debt standing at 119 percent. In this scenario, the minister emphasized how the national economy is resisting, but also highlighted the risks arising from the social climate and potential turbulence that could hit the country.
The government’s primary goal is to ensure the approval of the budget by the beginning of 2027. Lescure expressed confidence that the path will be respected, reiterating the Executive’s availability to use all necessary constitutional tools, including the use of Article 49.3 or ordinances, to ensure the stability of public accounts.
Warning signs in the financial markets
Despite Moody’s note, markets are already showing the first signs of growing distrust toward French management. Last Wednesday, the interest rate on ten-year debt exceeded the symbolic threshold of 5 percent for the first time since 2002. This data clearly signals investor concern regarding the government’s ability to pass the measures necessary for fiscal consolidation.
Another critical indicator is the spread against Germany. The gap between the two bonds has surged beyond 170 basis points, starting from levels that were around 70 points at the beginning of the year. This is an unprecedented situation since 2011, confirming how political instability and budget indiscipline are making French debt increasingly expensive and risky for international financial operators.
That is all for now. From the newsrooms in Nice and Paris, this is am1575news, Francia24 and Radio Centrale Milano.
Source: AudioVisione – AM 1575 News