Credit rating agency Moody’s kept France’s rating unchanged on Friday, but altered its outlook from “stable” to “negative,” citing rising risks from political fragmentation that could hinder efforts to control the country’s deficit.

Moody’s decision to maintain France’s long-term foreign currency sovereign credit rating at Aa3 comes as a relief for the French government, following downgrades by Fitch, DBRS, and S&P Global in just over a month.

Within a statement the country’s finance minister Roland Lescure said that Moody's decision “reflects the absolute necessity of building a collective path toward a budgetary compromise.”

“The government remains determined to meet the target of a 5.4% of GDP deficit in 2025 and to continue on an ambitious trajectory of reducing the public deficit to return below 3% of GDP by 2029, while preserving growth,” Lescure added.

However, Moody’s remarks were cautionary. The agency noted that the government’s decision to delay a major pension reform until 2028 could “exacerbate the government's fiscal challenges and negatively impact the economy's potential growth rate by reducing the labour supply.”

“France has highly competent public institutions, although the strength of the institutional framework is being tested in the context of an increasingly challenging domestic political backdrop,” the rating agency went on to say.

French Prime Minister Sebastien Lecornu had to shelve the pension reform to secure vital backing from the left, which had been threatening to bring down his fragile minority government, Reuters reports.

After gaining that concession, the Socialists on Friday warned they could attempt to topple the government again by Monday if a billionaire tax is not included in the 2026 budget.

The prospect of renewed political instability poses concerns for France’s economy, as data released on Friday showed French business activity contracted faster than anticipated in October.