Fitch Cuts France’s Outlook to Negative on Weaker Growth, Widening Deficit
The move comes as France faces economic and social pressure over its debt and growing borrowing costs
- Fitch Ratings lowered its outlook on France’s credit rating to negative from stable, citing weaker growth and a widening deficit.
- Fitch affirmed France’s A+ rating, supported by a wealthy economy, strong institutions, euro area membership and a resilient banking sector.
- Moody’s Ratings kept its Aa3 credit rating on France unchanged last week but retained its negative outlook due to political instability.
Fitch Ratings lowered its outlook on France’s credit rating to negative from stable, as the country faces economic and social pressure over its debt and growing borrowing costs.
Fitch said the negative outlook reflects a deterioration since its August review, and cited weaker growth, higher borrowing costs and a wider deficit. These factors are worsening debt dynamics from an already weak starting point, Fitch added.
Yields on France’s government bonds have also risen since the last review, Fitch said. The agency said it now forecasts interest payments will increase to 3.3% of GDP in 2028 from 2.5% of GDP in 2025. Fitch also sees France’s deficit at 5.5% of GDP in 2027, which it said reflects a weaker growth assessment and the risk of concessions during the budget process.
The next scheduled review date for France’s rating hasn’t yet been set, Fitch said, but added it expects to review the rating by end-February 2027 at the latest.
France’s public debt is closing in on 120% of its GDP, and the nation’s economy shrank in the third quarter. The government is expecting the deficit to hit 5.4% of GDP this year.
In recent weeks, hundreds of thousands of people have taken to the streets of Paris and other French cities, with some protesters resorting to vandalism and violence.
Right-wing presidential candidate Marine Le Pen has recently cast herself as a unifying figure, and far-left candidate Jean-Luc Mélenchon has vowed to cancel hundreds of billions of euros in French national debt, The Wall Street Journal reported.
Last week, Moody’s Ratings kept its Aa3 credit rating on France unchanged, citing the country’s diversified economy and strong public institutions. However, Moody’s retained its negative outlook on the country as France continues to face political instability and protests.
Moody’s retains a higher rating than peers Fitch and S&P Global Ratings. S&P had lowered France’s rating to A+ in October of last year.
Fitch affirmed the country’s A+ rating, which it said is supported by a large, wealthy and diversified economy, strong institutions, euro area membership and a resilient banking sector.