L’rating agency Fitch maintains France’s rating at AA –, but places it under negative outlook, which means that it plans to downgrade it in the future, it said in a press release on Friday.
The Minister of the Economy Antoine Armand indicated “to take note” of Fitch’s decision, while adding that “the agency underlines the strength of our economy, vast and diversified, the effectiveness of our institutions and our history of stability macro-financial”.
“Fiscal policy risks have increased since our last review,” explains Fitch, whose previous rating published on France dates back to April. “This year’s expected budget slippage places France in a more unfavorable situation, and we now expect larger budget deficits, which will lead to a sharp increase in public debt to reach 118.5% of GDP by 2028,” writes Fitch in its press release.
A deficit “at 5.4% of GDP” in 2025 and 2026
And while the government intends to reduce the French public deficit to 5% of GDP from 2025 then below 3% in 2029, the Fitch agency does not believe it: it has raised its public deficit forecasts for France in 2025 and 2026 “at 5.4% of GDP”. “We do not expect the government to meet its revised medium-term deficit forecast to bring the deficit below 3% of GDP by 2029,” she explains.
“Strong political fragmentation and a minority government complicate France’s ability to implement sustainable fiscal consolidation policies,” says the rating agency. For Antoine Armand, “the draft budget for 2025 that we have just presented reflects the government’s determination to straighten out the trajectory of public finances and control debt”.
In June, France suffered a downgrade of its sovereign rating by S&P, going from the third notch “AA” to the fourth “AA-”. This was the first downgrade since 2013 by this rating agency. After Fitch, the rating agency Moody’s, which ranks France a notch above its peers, will give its diagnosis on the French economy on October 25, before S&P Global on November 29.
