His popularity was already waning and today more pressure landed on the shoulders of French President Francois Hollande.
After Nicolas Sarkozy’s controversial term in office Hollande took power back in May after gaining significant popularity with his ‘Mr Normal’ campaign.
Although Hollande allowed himself two-years in which to repair the French economy rioting during the summer, increasing unemployment and weakening growth has ensured that his successes so far have been limited.
Now another blow has fallen on France as the second largest economy in the Eurozone saw its credit rating slashed to Aa1 by top credit ratings agency Moody’s Investors Service.
Earlier this year Standard & Poor also cut the nation’s AAA rating.
Following the ratings downgrade Moody’s released the following statement: ‘France’s fiscal outlook is uncertain as a result of its deteriorating economic prospects, both in the short term due to subdued domestic and external demand [and long term as a result of] structural rigidities’.
In order to combat the economic stagnation and a 13-year high in unemployment the French government has outlined 20 billion Euros worth of levies on larger companies with the intention of reducing the country’s deficit to 3 percent of gross domestic product in 2013.
Nicolas Veron, a fellow with the Washington-based Peterson economics institute, said of the development: ‘The timing of this sort of announcement is awkward. This downgrade comes a few days after announcements of structural reforms that are probably the strongest for a long time in France but it also signals that while they are ambitious the recent announcement of reforms is not enough to reassure investors that France is on the right track.’
After news broke of this latest ratings cut the Euro, which had been buoyed by nearing resolution regarding the Greek debt situation, posted declines against the majority of its most traded counterparts.
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As of 10:30 pm
The Pound to Euro exchange rate is currently trading at 1.2433
The Pound to US Dollar exchange rate is currently trading at 1.5923
The Pound to Australian Dollar exchange rate is currently trading at 1.5314
The Euro to US Dollar exchange rate is currently trading at 1.2807
The Euro to Pound exchange rate is currently trading at 0.8041
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