Fitch downgrades French debt outlook to negative, citing economic concerns

Fitch stated it took this action “in situations where there is a significant change in the issuer’s creditworthiness,” issuing a warning to France. While Fitch maintains its A+ rating, signifying upper-medium grade debt, it has downgraded the outlook from stable to negative, indicating a potential for a credit rating reduction if improvements are not seen.

The agency pointed to “weaker growth, a new deterioration in the budget and higher yields,” and revised its estimate of the debt-to-GDP ratio in 2028 to 124%, up from 122.7% in its previous assessment. Fitch also noted, “Persistent political fragmentation and a difficult social context increase the complexity of implementing sustained budgetary consolidation.” A new day of social mobilization is planned for Saturday, October 31st, and the 2027 finance bill is currently under debate in Parliament.

Economy Minister Roland Lescure responded, stating, “This assessment confirms the absolute necessity of adopting a responsible budget by the end of the year, which aims to restore public accounts by reducing our deficit to 5%,” and assuring that “the government is determined to pursue a path of budgetary consolidation.”

Standard & Poor’s (S&P), due to update its assessment on November 27th, currently assigns the same A+ rating as Fitch, but with a stable outlook. Last week, economists had predicted Moody’s would also downgrade French debt to match S&P and Fitch’s ratings. However, Moody’s maintained its higher rating of “Aa3 with a negative perspective,” indicating a risk of degradation. Moody’s attributed this to its assumption that a 2027 budget reducing the public deficit will be adopted and that social tensions will “moderate somewhat in the coming months.”

Beyond the three most prominent agencies, the Agence France Trésor lists five others. R&I and JCR both assign AAA with a negative outlook. DBRS also accompanies its AA rating with a negative outlook, while Scope has set its at A+ with a stable outlook. Finally, KBRA’s assessment, currently at AA- with a stable outlook, is scheduled for an update on December 11th, two weeks after S&P’s, which will be closely watched.