JPMorgan: 30-40% Chance of Further Negative Steps for France's Credit Rating

Forex - JPMorgan (NYSE:JPM) analysts warned that France might face a 30%-40% chance of further negative credit rating actions this year due to the inability to find a way to rein in public spending.

The Emmanuel Macron government experienced a series of downgrades or "outlook" cuts last year, exacerbated by political turmoil that worsened the country's already deteriorating fiscal situation, which included four different prime ministers within a twelve-month period.

These downgrades brought France's rating to its lowest level, at AA- or Aa3 according to Moody's equivalent scale. Fitch, who is set to review the country again in mid-March, maintains a 'negative outlook' on the rating, which effectively serves as a warning for a potential downgrade.

JPMorgan stated, "We see reasonable risks (30%-40%) for further negative rating actions in France if the government fails to present a credible medium-term fiscal consolidation plan," referring to either a full downgrade or an outlook cut.

Spending cuts have long been unpopular in Paris. Michel Barnier's government collapsed in December after left-wing and far-right lawmakers opposed a €60 billion austerity move aimed at curbing France's large fiscal deficit.