By Paul de Neuville, Paris correspondent, for Eurasia Business News – September 13, 2025. Article no. 1783.
Fitch has downgraded France’s credit rating from AA− to A+, marking the lowest rating ever assigned to the country by a major credit agency. The downgrade reflects France’s persistent and high public deficit, rising debt levels, and ongoing political instability that has made it difficult to implement strong fiscal reforms.
This downgrade pushes France down to the same rating level as countries like Estonia, Malta, Saudi Arabia, and China, and distances it from Eurozone peers like Germany and the Netherlands who still hold AAA ratings.
Implications of the Downgrade
The downgrade could raise borrowing costs for the French government as investors see increased risk, potentially leading to higher interest payments on public debt.
It increases pressure on the newly appointed Prime Minister Sébastien Lecornu to quickly push through budget reforms amid a divided parliament.
Fitch noted the political instability undermines confidence in France’s ability to achieve fiscal consolidation, making the reduction of the deficit and debt levels more challenging.
Other rating agencies may follow Fitch’s lead, intensifying market concerns and impacting France’s financial standing.
What Now for France?
The French government must expedite efforts to stabilize public finances and reduce the budget deficit, expected to be around 5.4% of GDP next year. France’s public debt has reached a record level, amounting to 3,345.8 billion EUR at the end of the first quarter of 2025, or 114% of the country’s gross domestic product (GDP).
Prime minister Lecornu is likely to negotiate compromises with opposition parties, possibly increasing taxes on the wealthy and moderating social reforms.
Maintaining investor confidence is critical to avoid further increases in borrowing costs.
The downgrade underscores the urgency for France to implement credible and effective fiscal policies to regain its financial stability and sovereign rating.
In conclusion, the Fitch downgrade is a significant wake-up call for France, signaling increased financial pressures and the necessity for immediate political and economic reforms to avoid further deterioration of its creditworthiness.
In October 2024 Fitch Ratings had issued a warning regarding France’s financial outlook, revising it to negative while maintaining the country’s credit rating at AA-. This decision came on the heels of the French government’s presentation of its 2025 budget, which aimed to address significant fiscal challenges, amid a deeply divided Parliament.
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© Copyright 2025 – Eurasia Business News. Article no. 1783
Eurasia Business News 