France Has Less Room to Maneuver on Balance Sheet, Moody’s Says

The French government has “less room for maneuver” on its budget, Moody’s Investors Service said, adding that it’s still assessing its stable outlook on the country’s top-rated debt.

“Relatively high levels of indebtedness, very high government expenditure in relation to nominal GDP and important structural fiscal deficits constrain the capacity for the government to respond to future shocks and weigh on the government’s fiscal strength,” Moody’s said in a “credit opinion” today.

Moody’s statement follows Standard & Poor’s decision late last week to strip France if its top credit rating.

French Finance Minister Francois Baroin issued a statement saying that Moody’s comment “confirms that the policies put in place by the French government in favor of growth, competitiveness and the control of public deficits are the right ones to pursue.”

To contact the reporter on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net

To contact the editor responsible for this story: Alan Crawford at acrawford6@bloomberg.net

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