Fitch Downgrades France's Outlook to Negative... Due to Deficit and Debt

Fitch Ratings placed France on a negative outlook in an unscheduled move that reflects the rapid deterioration of the country’s public finances, noting that the change in outlook “reflects the worsening situation since our review in August 2026, including weak growth, rising borrowing costs, and a widening budget deficit.”

In a statement issued late Friday evening, the agency said these factors “have exacerbated debt from an already weak position,” adding that ongoing political divisions and difficult social conditions are complicating the implementation of sustainable fiscal reforms.

Fitch maintained France’s credit rating at “A+,” the same level assigned to Portugal and Belgium, which is six notches above ratings in the high-yield debt category.

The announcement came on the eve of a new weekend of protests in French cities, including Paris, as authorities sought to contain violence following widespread unrest earlier this month.

The agency noted that “anticipated political debates ahead of the presidential elections have not significantly strengthened Fitch’s confidence in France’s prospects for sustainably reducing the deficit,” adding that “widespread protests over public services and the cost of living are making it more difficult to create the social conditions necessary for fiscal consolidation.”

Fitch’s decision represents the latest criticism of France’s inability to find a path to curb its rising debt, which has placed the country at the forefront of concerns in bond markets in recent weeks. French bond yields have risen more than those in other advanced economies this month, reaching their highest levels in 24 years.

Fitch has taken a tougher stance toward France and its public finances compared with its major rival rating agencies, having previously led rating downgrades ahead of its peers. In contrast, Moody’s Investors Service, which assigns France a rating one notch higher, chose last week not to downgrade the country’s rating, while maintaining a negative outlook.

Finance Minister Roland Lescure had welcomed Moody’s decision at the time, describing it as an “acknowledgment of the resilience of our economy and the credibility of the budget presented by the government.” However, on Friday, the minister adopted a more pessimistic tone, stating that Fitch’s assessment underscores the “urgent need to pass a responsible budget before the end of the year.”

The agency noted that France’s public finance outlook has deteriorated since its last assessment, adding: “We estimate that the cumulative fiscal adjustment required to stabilize debt has risen to approximately 3.5% of GDP, compared to 3% in August.”