Overview
- Fitch cut France’s sovereign rating from AA- to A+ on September 12, citing political fragmentation, limited room to raise taxes and a weakening path for debt and deficits.
- The agency projects public deficits above 5% of GDP in 2026–2027 and debt nearing about 121% of GDP by 2027, questioning the plausibility of a return below 3% by 2029.
- Market reaction has been muted with 10‑year borrowing costs near 3.5% and much of the deterioration already priced, though some investors bound by double‑A mandates may reduce exposure.
- Prime Minister Sébastien Lecornu has dropped a plan to scrap two public holidays, signaling tighter political constraints as the government prepares a 2026 budget.
- Banque de France chief François Villeroy de Galhau labels France a laggard on deficits, backs a consolidation led by spending control with targeted anti‑avoidance measures on high wealth, and sees 2025 growth at about 0.7% with the deficit around 5.4%.