Fitch downgrades France's credit rating amid political crisis
Fitch just dropped France's credit rating from "AA-" to "A+," mainly because the country's public debt keeps climbing and politics are getting messier.
Fitch expects France's debt-to-GDP ratio to jump from 113.2% in 2024 to 121% by 2027, and says there isn't a solid plan to fix it.
Political gridlock making it tough for France to shrink budget deficit
Things got rocky after Prime Minister Francois Bayrou quit when his budget plans didn't pass a confidence vote.
Fitch pointed out that political gridlock is making it tough for France to shrink its budget deficit, which was 5.8% last year—way above the Eurozone target of 3%.
The agency doesn't think France will hit its goal of cutting that deficit by 2029.
Finance Ministry admits downgrade stings but insists economy has strong fundamentals
Even with higher borrowing costs (France now pays almost as much as Italy for loans), government officials are trying to stay optimistic.
The national stats office predicts a small GDP growth of 0.8% in 2025, and new PM Sebastien Lecornu is already working on new budget talks.
The Finance Ministry admits the downgrade stings but insists the economy has strong fundamentals.
And heads up: S&P Global might update their own rating in November.