S&P: France’s budget at risk amid govt. downfall

The fall of France’s government has left the country without a clear strategy to reduce its budgetary deficit, Standard and Poor’s (S&P) warned on Thursday.

Prime Minister Michel Barnier is set to resign, marking the shortest tenure of a French prime minister in modern history, after far-right and leftist lawmakers voted to topple his minority government.

The political turmoil follows the rejection of key 2025 budget measures, including a €60 billion belt-tightening package. S&P predicts emergency stopgap legislation to roll over 2024 budget provisions into 2025 is the most likely path forward.

If rejected, President Emmanuel Macron may bypass parliament to prevent a government shutdown.

Both S&P and Moody’s flagged concerns about reduced fiscal consolidation. Moody’s, which assigned a negative outlook to France’s AA2 rating in October, called the crisis a credit-negative development. S&P maintained its AA- rating in its last review.

Attribution: Reuters

Subediting: M. S. Salama