The rating agency Fitch has downgraded France’s creditworthiness for long-term foreign currency liabilities from “AA” to “A+”.
The outlook is stable, said Fitch. As a reason for the downgrading, FITCH stated that the increasing debt burden of France limits the government’s ability to react to future economic shocks without further burdening public finances.
Fitch also referred to political instability. “The defeat of the government in the vote of trust shows the increasing fragmentation and polarization of domestic politics,” said Fitch. “This instability weakens the ability of the political system to achieve substantial budget consolidation, and makes it unlikely that the budget deficit could be reduced to 3 percent of GDP by 2029, as the failed government had sought.
Last Monday evening, Prime Minister François Bayrou had lost a question of trust in parliament after less than nine months and then lost his post at the head of the minority government. France’s new Prime Minister Sébastien Lecornu is currently trying to compromise under the political camps in order to bring a savings budget for 2026 through the National Assembly.
The rating agencies Moody’s and S&P Global Ratings follow with their own rating decisions in October and November.
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