Fitch agency plans to downgrade France's credit rating

The clouds are getting a little darker over the French economy. In a press release published this Monday, October 12, FitchRatings, one of the three reference rating agencies, indicated that it was considering “a downgrade of the credit rating” of France in the event of “a further substantial increase in public debt”. Paris still enjoys an A+ rating, one of the best the agency can give, but a downgrade would be a very bad signal for investors. Less encouraged to invest, they could therefore demand higher interest rates from the French State on its bonds, which would ultimately increase the cost of the debt.

The agency is thus putting the executive under pressure, on the eve of the opening of debates on the 2027 budget in the National Assembly hemicycle. According to FitchRatings, the government's plan "highlights the growing difficulty in reducing the budget deficit and stabilizing public debt in a context of low growth, rising interest costs and persistent political fragmentation." Because “a significantly larger adjustment than expected would be necessary to stabilize the debt,” she believes.

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Erupting social context

FitchRatings recognizes, however, that the project is “ambitious” and that its adoption “should take place more calmly than in recent years”, with next year’s presidential election encouraging the contenders for the Élysée not to complicate their task. But this copy “would not in itself solve the problem of the increasing scale of the budgetary adjustment that future governments would have to implement to stabilize the debt ratio”, that is to say the ratio between debt and GDP, underlines the agency.

Added to the volume of debt is an eruptive social context, “which makes budgetary consolidation difficult” and generates “pressure in favor of an increase in public spending”. Fitch warns: “The lack of substantial progress on deficit reduction, due for example to persistent political fragmentation, could lead to a revision of the outlook to 'Negative'. A further substantial increase in public debt could then lead to a downgrade of the rating.”

In the background of this possible deterioration, there is the increasing debt burden for the State. While it represented only 0.3% of GDP last year, soaring interest rates and market concerns about French debt should bring it to 0.8% of GDP between 2026 and 2028, according to the agency. A heavy financial burden for a government already looking for savings.