France said yesterday it would respond to a Moody’s credit downgrade by pushing on with reforms but complained the ratings agency had overlooked steps already taken to revamp the eurozone’s second-largest economy.

Moody’s kept a negative outlook due to structural challenges and a sustained loss of competitiveness

France lost its prized triple-A badge from the Standard & Poor’s in January and so Monday’s move by Moody’s was not surprising but it underlined doubts about Socialist President François Hollande’s ability to fix France’s public finances.

The downgrade also highlighted the divergence with the top-rated regional powerhouse Germany whose Finance Minister called it a “small warning” to its most important eurozone partner.

Moody’s yesterday said that it would assess the triple-A ratings of the eurozone’s EFSF and ESM bailout funds in light of the French downgrade.

However, its one-notch rating cut to Aa1 with a negative outlook did not affect the perceived status of French bonds which are seen as a safe haven from the crisis in southern Europe.

“Moody’s raised concerns about France’s capacity to reform and so it is up to us to show that this time we are going to carry out reforms,” Finance Minister Pierre Moscovici, leading a government offensive to play down the move, told journalists.

“The rating change does not call into question either the economic fundamentals of our country, the efforts undertaken by the Government or our creditworthiness.”

The Government is planning the toughest belt-tightening effort in 30 years in 2013 but must also try and halt a growth slow-down that has seen unemployment surge to 13-year highs.

Moody’s said it kept a negative outlook on France due to structural challenges and a “sustained loss of competitiveness” in the country, where business leaders blame high labour charges for flagging exports.