Fitch cuts France's rating on budget, economy woes

Francois Hollande

Fitch on Friday cut France's credit rating to AA-plus on an uncertain economic outlook amid the ongoing euro zone crisis and the need for structural reform, costing the monetary union's No. 2 economy its last major triple-A rating.

The outlook is stable.

In explaining the cut, the rating agency cited a number of causes for concern: weaker economic output, a jump in the unemployment rate, budget deficits and subdued external demand, among others.

(Read More: UK's Osborne Will Have to Sacrifice Some Sacred Cows )

Risks to fiscal projections "lie mainly to the downside," the rating agency said in a statement.

Standard & Poor's rates the country AA-plus with a negative outlook. Moody's rates the country Aa1 with a negative outlook.

The euro zone's three-and-a-half-year sovereign debt crisis has strained the monetary union, with even major economies such as France and Germany feeling the pain.

(Read More: Portugal's Bond Market Tanks as Crisis Deepens )

French gross domestic product, flat in 2012, is expected to drop 0.3 percent this year before expanding 0.6 percent in 2014, according to the median forecast in a Reuters poll this week.

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image: © Jean-Marc Ayrault

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