France Debt Rating Downgraded by Fitch

The Fitch financial notation agency degraded this Friday the note of the sovereign debt gala on a step, from AA- A A+ with stable perspective, Leaving four steps of the maximum note to the country, due to the degradation of their public finances.

Only three days after the appointment of Sébastien Lecornu as Prime Minister, the French room in less than two years, Fitch’s decision is a setback to the country’s financial perspectives, since the degradation of note It could imply that investors in the French debt require a higher interest ratethus aggravating the situation of public coffers.

The A + awarded by the Risk Classification Agency still places France within the high quality debt range, higher than that of other large economies in the Europe, such as Italy (BBB) or Spain (-A). However, it is four steps of the maximum note, the AAA of Germany.

In a message on network X, the Minister of Economy, Éric Lombard, acknowledged that the degradation of the note happens “For political uncertainty, despite the strength of the French economy.”

“The new prime minister (Lecornu) He has already pledged to speak with political forces with parliamentary representation, In view of adopting a budget for the nation and continuing with efforts to restore our public finances, “said Lombard.

In addition to not seeing clear plans to lower the high public debt of the second economy of the euro zone (113.2% of GDP), Fitch pointed to “political fragmentation” as a factor that lasts France and gave as an example the fall last Monday of the previous government of François Bayrou, which was lying in the National Assembly because it sought to apply austerity measures in 2026.

“From the early legislative elections in mid -2024, France has had three different governments. This instability weakens the capacity of the political system to achieve substantial fiscal consolidation and makes the main fiscal deficit reduce 3% of GDP by 2029, as projected by the outgoing government, “said the note of the analysts.

Fitch aligned with the public deficit prospects for France in the short term (5.5% of GDP in 2025, about 5.4% of the Executive), but estimated that this figure is very high when the expected mediated deficit is compared for the euro zone (2.7% of GDP).

He also highlighted the almost systematic French breach of the deficit target marked by the EU, exceeding 3% of GDP in the last 20 years (only three of those years was fulfilled).

The evaluation agency warned that the new Lecornu government will make opposition concessions so as not to apply the same cuts that the Bayoru executive and warned that the negotiations for the 2026 budget are extended and, therefore, eventual consolidation measures are postponed.

The other two major notation agency, also Americans Standard & Poor’s and Moody’s, will reassess the credit note of France between October and November.

In case of decline, the country’s capacity to finance in the markets is surely more expensive.