France has suffered a blow to its credit ratings, downgraded by Fitch to AA- from A+ with a stable outlook.
A catalyst for this change has been the no-confidence vote last week. Instability is weakening the government’s ability to deliver fiscal consolidation, Fitch says, adding that the outgoing government’s goal of bringing the fiscal deficit down to 3% of GDP is unlikely to be achieved by 2029.
That 3% figure has been exceeded in 17 of the last 20 years. No primary fiscal surplus has been seen since 2001.
“We expect the run-up to the presidential election in 2027 will further limit the scope for fiscal consolidation in the near term and see a high likelihood that the political deadlock continues beyond the election,” the agency noted.
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Also influential in the downgrade is France’s high and rising debt ratio – predicted to reach 121% of GDP by 2027, the agency says, up from 113.2% in 2024, without expectation of stabilisation. The 113.2% figure is already a 15 percentage point rise from 2019, and is double the median of the A category. France now has the third highest debt ratio of all sovereigns within the A and AA categories.
France’s 2025 fiscal deficit is projected at 5.5% of GDP, in line with the government’s 5.4% target and marking a decline from 2024’s 5.8% of GDP. Yet, this is elevated compared to the projected eurozone median deficit of 2.7% and the A-rated median of 2.9%.
Fiscal deficits will remain above 5% of GDP over the next two years, Fitch predicts.
High tax and a high share of structural spending are limiting the scope of fiscal consolidation, the agency added. Overall social spending sits at 32% of GDP, above the EU average of 26%, and tax is 45.6% of GDP – the highest in the EU, and above the region’s 40% average.
Moody’s downgraded France from Aa2 to Aa3 in December 2024. S&P Global Ratings affirmed the country’s AA-/A-1+ rating in February this year.
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