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Credit Rating Adjustment
France’s credit standing has reportedly been downgraded by S&P Global Ratings from AA- to A+ with a stable outlook, according to reports released Friday. Sources indicate this marks the third such downgrade by major rating agencies in approximately one month, creating additional pressure on the French government’s budgetary planning.
Economic Concerns Mount
The rating agency reportedly expects government debt to reach 121% of GDP by 2028, compared with 112% at the end of last year. Analysts suggest that without significant additional deficit-reducing measures, budgetary consolidation will proceed slower than previously anticipated. The report states that while France is expected to hit its 5.4% budget deficit forecast for this year, medium-term fiscal stability remains uncertain.
Political Instability Deepens
The downgrade comes amid significant political turmoil in France, where President Emmanuel Macron has struggled to maintain governmental stability since losing snap elections in June 2024. Prime Minister Sébastien Lecornu, Macron’s fourth different prime minister since the vote, reportedly resigned and was reappointed within a week, highlighting the country’s deepening political crisis.
According to the analysis, the upcoming 2027 presidential election “casts doubt” on whether France will be able to implement necessary fiscal consolidation measures. The report suggests this political uncertainty could prevent the country from achieving its pledged 3% of GDP budget deficit target by 2029.
Budgetary Challenges
Lecornu survived his first confidence votes on Thursday thanks to an abstention by most of the center-left Socialist party, but sources indicate this came at the cost of suspending Macron’s landmark pension reforms. The freeze will reportedly cost €400 million in 2026 and €1.8 billion the following year, creating additional fiscal pressure.
Ahead of the votes, Lecornu reportedly urged lawmakers to negotiate over his proposed €30 billion package of tax rises and spending cuts rather than resorting to further challenges to his premiership. The government is attempting to pass a budget that would bring the deficit below 5% next year.
Market Implications
The downgrade is likely to further increase France’s borrowing costs as the spread between French and German bonds has been widening in recent weeks. This development occurs alongside other global market concerns and international trade tensions that are affecting economic stability worldwide.
Finance Minister Roland Lescure reportedly responded to the downgrade by stating it is “now the collective responsibility of the government and parliament to adopt a budget that meets this target before the end of 2025.” The situation reflects broader geopolitical shifts and economic challenges facing European nations amid changing global dynamics and increasing financial pressures.
Regional Context
The downgrade places France in a challenging position within the Eurozone, where it remains the second-largest economy. Analysts suggest that the country’s political instability and fiscal challenges could have broader implications for European economic stability, particularly as other nations face similar credit concerns and trade-related pressures in the current global economic climate.
- Third credit rating downgrade for France in approximately one month
- Government debt expected to reach 121% of GDP by 2028
- Political instability following snap elections and multiple prime ministerial changes
- Suspended pension reforms creating additional fiscal pressure
- Borrowing costs expected to increase following rating action
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