Fitch cuts France's rating outlook to negative over deficit and debt risks
International credit rating agency Fitch Ratings has revised the outlook on France's credit rating from stable to negative due to deteriorating public finances. The decision reflects slowing economic growth, rising borrowing costs, and a widening budget deficit.
According to Bloomberg, the decision was made outside the agency's scheduled rating review calendar, underscoring its concerns about the country's fiscal position. France's credit rating itself remained unchanged at A+, in line with the ratings assigned to Portugal and Belgium.
In its statement, Fitch noted that conditions had deteriorated significantly since August 2026. Political fragmentation and widespread protests against the rising cost of living have created additional obstacles to reducing the deficit.
Fitch warns of growing debt burden in France
According to the agency's estimates, the fiscal adjustment required to stabilize government debt has increased from 3% to 3.5% of GDP. France's budget deficit could reach 5.4% of GDP by the end of 2026.
"Political fragmentation and a challenging social environment make sustained fiscal consolidation difficult," Fitch analysts said.
French government bond yields rose more sharply in October than those in other developed markets, reaching a 24-year high. The spread between French and German 10-year government bond yields widened from 85 basis points in early September to 178 basis points in October, although it narrowed to approximately 165 basis points by Friday.
The situation is further complicated by the upcoming presidential election and the lack of a parliamentary majority for Prime Minister Sébastien Lecornu's government. His proposed budget includes spending restrictions and higher tax revenues aimed at reducing the deficit to 5% of GDP in 2027.
Finance Minister Roland Lescure said Fitch's decision underscored the need to adopt a responsible budget before the end of the year. The agency plans to complete its next scheduled rating review by the end of February.
French economy contracts amid political instability
Fitch's decision followed a more restrained assessment by Moody's, which had left France's rating unchanged a week earlier while maintaining a negative outlook. French authorities interpreted that decision as confirmation of the economy's resilience and confidence in the government's fiscal policy.
However, economic indicators continue to deteriorate. High interest rates, weak investment, and political uncertainty are limiting the government's ability to stabilize public finances.
Another warning sign came from a 0.1% contraction in France's GDP in the third quarter of 2026. After stagnating in the second quarter, the economy returned to contraction amid high borrowing costs and elevated energy prices.
Weak economic activity makes it harder to reduce the budget deficit by limiting tax revenues and increasing the debt burden. Political uncertainty further discourages investment and complicates the implementation of the government's proposed measures.
Earlier, we reported that French authorities had sought to ease tensions amid widespread protests while preventing the budget deficit from widening further. The government was seeking a compromise between protesters' demands and the need to control public spending.
Latest Fitch Ratings News
-
Afghanistan
-
Albania
-
Algeria
-
Angola
-
Argentina
-
Armenia
-
Australia
-
Austria
-
Azerbaijan
-
Bahamas
-
Bahrain
-
Bangladesh
-
Belarus
-
Belgium
-
Bolivia
-
Botswana
-
Brazil
-
Brunei
-
Bulgaria
-
Cambodia
-
Cameroon
-
Canada
-
Chile
-
China
-
Colombia
-
Congo
-
Costa Rica
-
Cote d'Ivoire
-
Croatia
-
Cuba
-
Cyprus
-
Czechia
-
DR Congo
-
Denmark
-
Dominican Republic
-
Ecuador
-
Egypt
-
El Salvador
-
Estonia
-
Eswatini
-
Ethiopia
-
Finland
-
France
-
Georgia
-
Germany
-
Ghana
-
Greece
-
Haiti
-
Hong Kong
-
Hungary
-
India
-
Indonesia
-
Iran, Islamic republic
-
Iraq
-
Ireland
-
Israel
-
Italy
-
Jamaica
-
Japan
-
Jordan
-
Kazakhstan
-
Kenya
-
Korea
-
Kuwait
-
Kyrgyzstan
-
Laos
-
Latvia
-
Lebanon
-
Lesotho
-
Libya
-
Lithuania
-
Luxembourg
-
Madagascar
-
Malaysia
-
Malta
-
Mauritius
-
Mexico
-
Moldova
-
Mongolia
-
Montenegro
-
Morocco
-
Mozambique
-
Myanmar
-
Namibia
-
Nepal
-
Netherlands
-
New Zealand
-
Nigeria
-
North Macedonia
-
Norway
-
Oman
-
Pakistan
-
Palestine
-
Panama
-
Papua New Guinea
-
Paraguay
-
Peru
-
Philippines
-
Poland
-
Portugal
-
Puerto Rico
-
Qatar
-
Reunion
-
Romania
-
Rwanda
-
Saudi Arabia
-
Serbia
-
Singapore
-
Slovakia
-
Slovenia
-
Somalia
-
South Africa
-
Spain
-
Sri Lanka
-
Sweden
-
Switzerland
-
Syria
-
Taiwan
-
Tajikistan
-
Tanzania
-
Thailand
-
Trinidad and Tobago
-
Tunisia
-
Turkey
-
UAE
-
Uganda
-
Ukraine
-
United Kingdom
-
United States
-
Uruguay
-
Uzbekistan
-
Venezuela
-
Vietnam
-
Yemen
-
Zambia
-
Zimbabwe
- Forex
- Crypto
