Moody's: Macron's large parliamentary majority eases path to reform; credit positive

"The French parliamentary election result has handed President Emmanuel Macron's government a strong mandate to pass his reform-focused policy agenda, which is credit positive for France's sovereign rating," Moody's Investors Service said in a report on Monday.

Key quotes:

  • The new French government faces significant fiscal and economic challenges linked to the country's weak growth profile and high government debt burden
  • The way in which these challenges are addressed will drive the trajectory of France's rating and outlook
  • General government debt is nearly 100% of GDP and is unlikely to decline materially before the end of the decade
  • France's growth potential is relatively weak, with trend growth unlikely to be above 1.5% in the absence of reforms
  • Macron's reform agenda has the potential to address France's core credit challenges and reverse the decline in France's fiscal and economic strength seen in recent years
  • While the reforms are likely to face opposition, especially from trade unions, the size of the government's mandate and the president's apparent determination to push them through are likely to overcome such challenges

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