Bickering French parties scramble for power as Moody’s threatens to downgrade credit rating from stable to negative amid ‘unprecedented’ turmoil and hard-left plans for 90% tax that has spooked the wealthy elite

French MPs have plunged into tense negotiations today after hotly contested elections left the government adrift with no party close to a majority and sparked fears over the future of the nation’s economy.

Having emerged with a shock victory on Sunday, new MPs from the left-wing New Popular Front (NFP) alliance began visiting their new workplaces in parliament ahead of a first session on July 18.

But the coalition of Greens, Socialists, Communists and the hard-left France Unbowed (LFI) is still debating who to put forward as a potential prime minister.

And their most prominent figurehead, LFI leader Jean-Luc Melenchon, has been dismissed as a potential candidate not only by Macron’s centrists but even by members of his own alliance.

Meanwhile, France could face more economic turmoil if the NFP succeeds in implementing plans to roll back Macron’s widely loathed 2023 pension reform amid threats from credit raters.

The alliance plans a huge spending spree that would reduce the pension age from 64 to 60, boost public sector wages and freeze prices of essential goods, but Macron’s camp warned this could cost as much as €300 billion.

France is already grappling with a budget deficit of 5.5% of GDP, and rater Moody’s warned it could downgrade its credit score for the nation’s more than €3 trillion pile of debt if the NFP follows through on reversing pension reform.

Such a move from ‘stable’ to ‘negative’ could increase borrowing costs for France, dramatically reduce investor confidence and potentially strain public finances yet further.

Read more: Bickering French parties scramble for power as Moody’s threatens to downgrade credit rating from stable to negative amid ‘unprecedented’ turmoil and hard-left plans for 90% tax that has spooked the wealthy elite


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