France's equities fall after Moody's downgrades credit rating due to fiscal challenges and political instability. Eurozone economy at risk.

The action, which will put pressure on the nation’s borrowing costs, reflects doubt that a new government can mend the deteriorating financial situation.

Credit ratings agency Moody's cut France's credit rating to "Aa3" from "Aa2" on Friday, over expectations that the country's public finances will be significantly weaker in the coming years. "In a highly politically fragmented environment,

Moody’s downgraded France’s credit rating on Saturday, saying that it expects the country’s incoming government to struggle to tackle its deficit. In an unscheduled announcement early on Saturday morning,

France’s debt was downgraded from Aa2 to Aa3, which means there’s a slightly higher probability that the country could default on debt payments, Moody’s said in a note.

Credit ratings agency Moody's unexpectedly downgraded France's rating on Friday, adding pressure on the country's new prime minister to corral divided lawmakers into backing his efforts to rein in the strained public finances.

France's newly appointed premier faces the challenge of bringing down the country's spiraling fiscal deficit and thrashing out a 2025 budget.