France has suffered a fresh blow to its financial credibility after Fitch Ratings downgraded the country’s credit score from “AA-” to “A+”, citing deepening political instability and rising debt.
The downgrade comes in the wake of France’s ongoing political crisis. Outgoing Prime Minister François Bayrou was ousted after losing a parliamentary confidence vote over his unpopular budget plan, which had included sharp spending cuts such as scrapping two public holidays. His replacement, Sébastien Lecornu, now faces the challenge of restoring investor confidence while negotiating with a fragmented parliament.
Fitch highlighted that France’s public debt—already at 113.2% of GDP in 2024—is forecast to climb to 121% by 2027, with little chance of stabilisation in the near term. The agency also warned that France is unlikely to meet the EU’s target of reducing its deficit below 3% of GDP before 2029.
The political turmoil has made it harder to deliver meaningful fiscal reforms. Fitch cautioned that the run-up to the 2027 presidential election would further constrain efforts to cut spending, leaving France vulnerable to economic shocks.
Economists say the downgrade was largely expected, but it risks nudging up borrowing costs and mortgage rates for households. Still, analysts note that France retains some strengths, including a diversified economy, stable unemployment (7.5%), low inflation compared to its EU peers, and high household savings.
Finance Minister Eric Lombard acknowledged Fitch’s concerns but insisted France’s economy remained solid. He stressed that Prime Minister Lecornu had already begun cross-party consultations to push through a budget aimed at reducing the deficit.
Experts like Hadrien Camatte of Natixis CIB and Sylvain Bersinger of Bersingéco argue that breaking political deadlock is key. Without fiscal discipline, they warn, France could face a critical situation within a few years.
For now, France remains the third most indebted country in the eurozone after Greece and Italy, but unlike its southern neighbours, rating agencies’ outlook for France has turned more negative. Rival agency S&P Global is due to issue its own update on France in November.
