LONDON (Reuters) – The outcome of France’s parliamentary election is negative for the country’s credit rating, Moody’s 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.
(Reporting by Marc Jones; Editing by Amanda Cooper)
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