This is the second serious alert from Fitch addressed to France in less than three months. The rating agency, which in October placed France's rating under negative outlook, warned on Friday of the consequences for budgetary policy of the overthrow of Michel Barnier's government.
That “highlights the extent to which the highly fragmented French political landscape can paralyze the implementation of fiscal policy”warns Fitch in a press release.
Fitch, however, maintained France's rating at AA-. In October, it gave this rating a negative outlook, signaling that it was considering lowering it in the medium term.
“The country's fiscal parameters, which are weaker than those of its peers (…), and its increased fiscal policy risks have been important factors” of this revision, recalls the rating agency.
The study of the finance bill (PLF) for 2025 is frozen after the censure voted on Wednesday by the deputies against the government of Michel Barnier, which led him to resign.
The worst performance of the 27 with Romania
The President of the Republic Emmanuel Macron announced that the future government would table a special law “ before mid-December in Parliament »counting on this rare but already used legislative tool, to allow the state apparatus to function in the absence of promulgation of a budget on January 1st.
But Fitch believes that the parties risk“exploit the process for political ends”.
-Furthermore, “the fragmentation of the National Assembly makes it difficult to find compromise on budgetary consolidation (…). It is therefore very unlikely that France will achieve the deficit target of 5% of GDP initially presented by (Michel) Barnier. notes Fitch again.
“The collapse of the government also threatens France's medium-term consolidation plan and compliance with EU budgetary rules”it is specified.
With a deficit this year which should exceed 6% of GDP, France displays the worst performance of the Twenty-Seven with the exception of Romania, very far from the 3% ceiling authorized by the EU.
“Despite the political crisis, France does not face any major refinancing problems on international bond markets”, but “persistently higher borrowing costs would only worsen fiscal consolidation problems”, Fitch warned again.
Fitch expects public debt to increase to 118.5% of GDP by 2028, and has reduced its growth projection for 2025 to 0.9% from 1.2% previously.
