PARIS – The Standard & Poor's rating agency has downgraded France's principal credit rating by one notch to "AA."
In a statement Friday, the rating agency said it feared the French government will struggle to reduce its deficit and debt and make the necessary reforms to make its economy more competitive.
The agency also said it thinks unemployment is likely to stay elevated until 2016 and that such joblessness will make reforms politically difficult. In addition, the agency said France has little room to raise taxes further in order to plug budget holes.
The rating's outlook is stable.
Standard & Poor's was the first agency to pull France's top AAA rating. The other two major ratings agencies, Moody's Investors Service and Fitch Ratings, have since followed suit.