The rating’s agency Moody’s has stripped France of it’s AAA credit rating. The agency cited France’s continued exposure to the eurozone debt crisis, but also said the inflexible labour market and low levels of innovation were seriously hindering France’s growth prospects.
In a statement Moody’s said: “Further shocks to sovereign and bank credit markets would further undermine financial and economic stability in France as well as in other euro area countries.
“The impact of such shocks would be expected to be felt disproportionately by more highly indebted governments such as France.”
The move is a serious blow to the socialist governments economic policies. Francois Hollande’s government is trying to push through labour reforms, though some believe they do not go far enough.
I am actually surprised that this hasn’t happened sooner. France’s policies are very anti business.
Markets were down yesterday on this downgrade of France as well as comments Fed Chairman Ben Bernake made about the danger of the fiscal cliff. We need real resolutions sooner than later.