(FILES) This illustration picture taken in Toulouse on March 18, 2025, shows screens displaying the logo of the rating agency Fitch Ratings and signs of the ratings used by rating agencies. On the evening of September 12, 2025, the rating agency Fitch downgraded France's sovereign rating to A , penalizing the country for its persistent political instability and budgetary uncertainties, which are hindering the consolidation of its severely deteriorated public finances. (Photo by Lionel BONAVENTURE / AFP)
PARIS: Credit rating agency Fitch has downgraded France’s sovereign credit score to the country’s lowest level on record, stripping the eurozone’s second-largest economy of its AA- status as it grapples with political crisis and ballooning debt.
The move last Friday, bringing Fitch’s score to A+, heaps pressure on Prime Minister Sebastien Lecornu just days into the job as he scrambles to form a Cabinet and draft a 2026 budget that can pass a deeply divided Parliament.
The rating, the lowest on record for a major credit rating agency, has a stable outlook for future moves, Fitch said, attributing its cut to the lack of “a clear horizon for debt stabilisation in subsequent years”.
The downgrade was already priced into markets, analysts said. But the timing of the move is awkward for France, and underlines growing investor concerns over its ability to rein in its budget deficit – now the highest in the eurozone.
President Emmanuel Macron last week tapped Lecornu, a conservative loyalist, to form a government after lawmakers ousted veteran centrist François Bayrou in a confidence vote over his plans for a 44bil or about US$52bil budget squeeze.
Lecornu became Macron’s fifth prime minister in less than two years, and faces a near-impossible task to pass a slimmed-down budget through Parliament – ordeals that led to the defenestration of France’s last two prime ministers.
“This instability weakens the political system’s capacity to deliver substantial fiscal consolidation,” Fitch said in a statement.
Finance Minister Eric Lombard said he had taken note of Fitch’s move and that Lecornu was pushing ahead with consultations with lawmakers to get a budget adopted and restore the public finances.
Fitch’s downgrade to an A+ score is more consequential than recent downgrades as it could presage peers to follow suit, potentially leading to forced selling of French bonds by investors bound by ratings thresholds.
French debt has come under pressure since Bayrou called the confidence vote last month, driving borrowing costs close to those of Italy, which carries the eurozone’s second-highest debt burden and a much lower credit rating.
With bond markets watching closely, Lecornu must find ways to shrink the budget deficit next year from an estimated 5.4% of gross domestic product, though his plan will likely be less ambitious than Bayrou’s 4.6% target. His draft budget is due to be sent to parliament by Oct 7, though in a pinch he could put it off to Oct 13.
To win sufficient parliamentary support, Lecornu is expected to make concessions to the Socialists, including higher taxes on the wealthy and softening Macron’s hard-won 2023 retirement reform.
But he risks alienating lawmakers in Macron’s own party and the conservative Republicans if he goes too far.
France’s downgrade to A+ is unlikely to pressure its major banks, with BNP Paribas and Credit Agricole already rated A+ and Societe Generale a notch lower by Fitch. — Reuters
