S&P Downgrades France’s Credit Rating, Citing Soaring Debt and Political Instability
Standard & Poor’s lowers France’s rating from AA- to A+, warns debt-to-GDP will hit 121% by 2028 amid fragile government and growing fiscal risks
Standard & Poor’s has downgraded France’s sovereign credit rating from AA- to A+, warning that the country’s debt trajectory and political turbulence now impose significant risks on its fiscal outlook.
The agency forecast that France’s debt burden would rise to 121 percent of gross domestic product by 2028, up from 112 percent at the end of 2024.
The downgrade comes amid sweeping political uncertainty following President Emmanuel Macron’s failed snap elections in June 2024.
Prime Minister Sébastien Lecornu, a close Macron ally and the fourth person to hold that post since last year’s vote, recently survived two no-confidence motions — but only after suspending Macron’s pension reform, which is expected to cost several billions of euros over the coming years.
Despite projecting that France will meet its 5.4 percent deficit target in 2025, S&P expressed deep doubt that Brussels’ three percent target can be met by 2029 without additional budgetary discipline.
It warned that, “in the absence of significant additional deficit-reducing measures, the consolidation path will be slower than previously expected”.
The agency also noted that political volatility ahead of the 2027 presidential election will challenge efforts to maintain fiscal discipline.
In response to the downgrade, Finance Minister Roland Lescure called on parliament to unite behind the 2025 budget and commit to restoring credibility in public finances.
He warned that market confidence now hinges on swift legislative action.
The downgrade is likely to elevate France’s borrowing costs as bond investors demand higher yields, especially as French yields already trade at a widening spread above German bunds.
And because credit rating actions rarely occur off cycle, the move underscores how severely markets and regulators now view France’s fiscal resilience.
This downgrade follows Fitch’s recent move to strip France of its “double A” status, lowering it from AA- to A+.
That earlier decision cited persistent deficits and chronic political instability that undermine the government’s ability to execute structural reforms.
Analysts say the combined impact of these downgrades may pressure domestic growth and investment, while tightening the fiscal space available to government.
Policymakers now face the difficult task of balancing reform, debt reduction, and political stability as France heads toward critical elections.
The agency forecast that France’s debt burden would rise to 121 percent of gross domestic product by 2028, up from 112 percent at the end of 2024.
The downgrade comes amid sweeping political uncertainty following President Emmanuel Macron’s failed snap elections in June 2024.
Prime Minister Sébastien Lecornu, a close Macron ally and the fourth person to hold that post since last year’s vote, recently survived two no-confidence motions — but only after suspending Macron’s pension reform, which is expected to cost several billions of euros over the coming years.
Despite projecting that France will meet its 5.4 percent deficit target in 2025, S&P expressed deep doubt that Brussels’ three percent target can be met by 2029 without additional budgetary discipline.
It warned that, “in the absence of significant additional deficit-reducing measures, the consolidation path will be slower than previously expected”.
The agency also noted that political volatility ahead of the 2027 presidential election will challenge efforts to maintain fiscal discipline.
In response to the downgrade, Finance Minister Roland Lescure called on parliament to unite behind the 2025 budget and commit to restoring credibility in public finances.
He warned that market confidence now hinges on swift legislative action.
The downgrade is likely to elevate France’s borrowing costs as bond investors demand higher yields, especially as French yields already trade at a widening spread above German bunds.
And because credit rating actions rarely occur off cycle, the move underscores how severely markets and regulators now view France’s fiscal resilience.
This downgrade follows Fitch’s recent move to strip France of its “double A” status, lowering it from AA- to A+.
That earlier decision cited persistent deficits and chronic political instability that undermine the government’s ability to execute structural reforms.
Analysts say the combined impact of these downgrades may pressure domestic growth and investment, while tightening the fiscal space available to government.
Policymakers now face the difficult task of balancing reform, debt reduction, and political stability as France heads toward critical elections.
