PARIS – France’s credit score was put on a negative outlook by Fitch Ratings, an unscheduled move that highlights how quickly the country’s public finances are souring.
The change “reflects a deterioration since our August 2026 review comprising weaker growth, higher borrowing costs and a wider deficit,” the company said in a statement late on Oct 30.
“These worsen debt dynamics from an already weak starting point,” Fitch added. “Persistent political fragmentation and a challenging social backdrop increase the difficulty of delivering sustained fiscal consolidation.”
France remains at A+ on the company’s assessment, on par with Portugal and Belgium, and six notches above junk.
The announcement arrives on the eve of another weekend of protests in cities including Paris.
Authorities are trying to contain violence after large-scale riots earlier in October.
“The emerging policy debate ahead of the presidential election has not materially strengthened Fitch’s confidence in the prospects for durable deficit reduction,” it said in the statement.
“Large protests over public services and living costs further complicate the social context for fiscal consolidation.”
The verdict is the latest indictment of France’s inability to find a way to contain its swelling debt burden, which put the nation at the forefront of bond market anxiety over the past weeks.
French yields have risen more than any other in the developed world in October, hitting the highest level in 24 years.
Fitch has taken a noticeably activist stance on France and its public finances, having led downgrades before major rivals.
By contrast, Moody’s Ratings, whose credit score is one notch higher, last week opted against a cut while keeping its negative outlook.
The reprieve was hailed by Finance Minister Roland Lescure at the time as a move that “recognises the solidity of our economy and the credibility of the budget presented by the government.”
On Oct 30, he struck a more sombre tone, saying Fitch’s “assessment underlines the pressing need to pass a responsible budget before the end of the year.”
The company observed that the outlook for the public finances has worsened since the last time it looked at the matter.
“We estimate the cumulative fiscal adjustment needed to stabilise debt has risen to around 3.5% of GDP, from 3.0% in August,” Fitch said.
The country’s ever-increasing debt mountain is fuelled by a deficit set to blow out to 5.4% of economic output in 2026.
Political gridlock, slumping growth and rising interest costs have derailed attempts at consolidation.
The economic challenge were underscored earlier Friday when data showed output contracted in the third quarter, dragged down by a persistent slump in investment.
Prime Minister Sebastien Lecornu has proposed a finance Bill to sharply constrain spending and raise tax revenues to meet a deficit goal of 5% in 2027, but the blueprint’s future is uncertain as he has no majority in Parliament.
Opposition groups are unwilling to compromise as they focus on presidential elections six months from now.
Leading candidates from the far-left to the far-right are proposing radical changes in policy, including a lower retirement age and vast tax hikes for business.
The heightened uncertainty has caused a closely watched gauge of bond risk to rise to levels last seen during the euro-area debt crisis.
The spread between 10-year yields in France and Germany, the region’s safe asset, reached 178 basis points in October, compared to just 85 basis points at the start of September before the selloff picked up. It was around 165 on Oct 30.
Fitch said on Oct 30 that developments in the country warrant a “deviation from the calendar,” hence its surprise announcement.
It added that the next scheduled review of France should conclude by the end of February. BLOOMBERG
