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FRANCE: Fitch Affirms AA- Rating With Negative Outlook

FRANCE
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Fitch affirmed France's rating at AA- with negative outlook - there had been some concern ahead of today's review that they would have been downgraded to A for the first time. The Negative Outlook has been in place since October.

  • Per Fitch's report: "We forecast that deficits will remain sizeable at 5.6% of GDP in 2026 and 5.4% in 2027, given the lack of detail on medium-term fiscal consolidation and expected political challenges to getting the 2026 budget approved. Prime Minister Bayrou has indicated a willingness to revisit the pension reform to gain opposition support. However, significant rollbacks could undermine planned fiscal consolidation over the medium term, potentially having a moderately negative impact on France's fiscal outlook, in our view. An increase in defence spending from the current 2.1% of GDP will intensify fiscal pressures and we would anticipate some offsetting measures."
  • Fitch also notes "We anticipate new elections will likely be called in 2H25. However, the outcome and economic policy implications are highly uncertain."
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Fitch affirmed France's rating at AA- with negative outlook - there had been some concern ahead of today's review that they would have been downgraded to A for the first time. The Negative Outlook has been in place since October.

  • Per Fitch's report: "We forecast that deficits will remain sizeable at 5.6% of GDP in 2026 and 5.4% in 2027, given the lack of detail on medium-term fiscal consolidation and expected political challenges to getting the 2026 budget approved. Prime Minister Bayrou has indicated a willingness to revisit the pension reform to gain opposition support. However, significant rollbacks could undermine planned fiscal consolidation over the medium term, potentially having a moderately negative impact on France's fiscal outlook, in our view. An increase in defence spending from the current 2.1% of GDP will intensify fiscal pressures and we would anticipate some offsetting measures."
  • Fitch also notes "We anticipate new elections will likely be called in 2H25. However, the outcome and economic policy implications are highly uncertain."