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Credit rating agency Moody’s has described Emmanuel Macron’s ascent to the French presidency as “on balance, credit-positive for France”, but warned that his ability to deliver depends on the outcome of the country’s legislative elections in June.

Moody’s senior vice president Sarah Carlson cited Mr Macron’s policy platform which, according to the agency, should boost growth and reduce the country’s debt through “important changes to labour market regulation and competitiveness”.

Whether Mr Macron can achieve these reforms will come down to the likelihood of his party En Marche winning a majority in the Legislative Assembly, or forming a governing coalition, Moody’s said, adding:

The ability of France’s policymakers to design, and successfully implement, policies which enhance growth and support fiscal consolidation over time will drive the trajectory of France’s rating and outlook over the medium-term. The new president will face tests in all of these areas.

France’s debt, which is near 100 per cent of its GDP, is “unlikely to decline materially before the end of this decade”, while its growth potential is “relatively weak”, Moody’s said. If the president and the assembly fail to work together, France could face “as many as five years of policy drift that would further undermine the country’s credit profile”.

Moody’s rates France as Aa2 with a stable outlook.

Rating agency Standard & Poor’s said its AA, stable rating for France was “unaffected by the presidential election outcome”.

“The next government of France is likely to continue or even accelerate the current moderate pace of reform,” the agency said. “The capacity of Mr. Macron to implement the above-mentioned economic policy plans will, however, depend on the outcome of the legislative elections.”

Copyright The Financial Times Limited 2017. All rights reserved.
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