S&P Global has downgraded France’s long-term credit rating from AA- to A+, citing risks related to fiscal consolidation amid political instability and rising debt.
The agency warned that France’s government may struggle to reduce its budget deficit, with debt projected to reach 121% of GDP in 2028, compared to 112% at the end of last year. The downgrade reflects concerns over governance challenges and political turmoil, including recent no-confidence votes against Prime Minister Sebastien Lecornu, who recently survived two such votes after suspending a contested pension reform package. France has faced significant challenges in managing its finances, with the government struggling to rein in spending while dealing with political turbulence. S&P also projected economic growth of 0.7% in 2025, with only a muted recovery expected in 2026. The agency warned that uncertainties surrounding France’s public finances remain high, especially ahead of the 2027 presidential election. The decision to suspend the 2023 pension reform law was cited as a sign of political fragility. This is not the first sign of trouble for France’s creditworthiness, as earlier this year S&P had lowered the country’s outlook from stable to negative, and last month Fitch also cut France’s rating from AA- to A+ for similar concerns about debt and the lack of a credible fiscal roadmap. The downgrade could increase France’s borrowing costs, with potential consequences including increased interest rates and forced bond sales by institutional investors limited to holding high-grade sovereign debt. In reaction to the downgrade, Finance Minister Roland Lescure stated that it is now the collective responsibility of the government and parliament to ensure the deficit is on a path to the EU ceiling of 3% of GDP. However, S&P warned that without significant additional budget deficit-reducing measures, the pace of consolidation will be slower than previously projected. The agency also highlighted France’s policy uncertainty and a weak record of delivering reforms as key factors in its decision, further weighing on its credit rating.
France’s economic challenges are compounded by broader European and global economic conditions. The country’s financial situation is a reflection of both domestic policy struggles and external pressures, including stagnant growth and rising inflation in the Eurozone. Analysts are closely monitoring how France’s economic policies will adapt in the face of these challenges, particularly as the 2027 presidential election approaches. The downgrade could also have implications for France’s ability to attract foreign investment, as investors may become more cautious about its long-term economic stability. Meanwhile, the government is under pressure to demonstrate a credible fiscal roadmap that addresses its mounting debt concerns and meets European Union benchmarks for public finances.