The agency has flagged governance challenges and ballooning liabilities in its latest sovereign review
S&P Global has downgraded France’s long-term credit rating from AA- to A+, warning that rising debt and political tensions threaten the government’s ability to reduce its budget deficit. The agency also revised France’s outlook to ‘stable’ on Friday.
S&P expects France’s government debt to reach 121% of GDP in 2028, compared with 112% at the end of last year, the agency said. The country has struggled to rein in spending while dealing with political turbulence. Prime Minister Sebastien Lecornu recently survived two no-confidence votes in parliament after suspending a contested pension reform package.
S&P warned that uncertainty surrounding France’s public finances remains high, especially ahead of the 2027 presidential election. The agency cited the government’s decision to suspend the 2023 pension reform law as a sign of political fragility. It also projected economic growth of 0.7% in 2025, with only a muted recovery expected in 2026. S&P added that risks to the outlook remain significant, particularly if rising government borrowing costs spill over into broader financing conditions in the economy.
In reaction to the downgrade, Finance Minister Roland Lescure said it is now “the collective responsibility of the government and parliament” to pass a budget by the end of the year, ensuring that the deficit is on a path to the EU ceiling of 3% of GDP. S&P said France will likely meet its 2025 deficit target of 5.4% of GDP, but warned that “in the absence of significant additional budget deficit-reducing measures,” the pace of consolidation will be slower than previously projected. The agency added that France’s “policy uncertainty” and a weak record of delivering reforms further weighed on its decision.
This is not the first sign of trouble for France’s creditworthiness. Earlier this year, S&P lowered the country’s outlook from ‘stable’ to ‘negative’ due to weak public finances. Last month, Fitch also cut France’s rating from AA- to A+, citing similar concerns about debt and the lack of a credible fiscal roadmap. The downgrade could increase France’s borrowing costs. It could also trigger forced bond sales by institutional investors limited to holding high-grade sovereign debt.
