S&P Global downgraded France’s ratings to ‘A+/A-1’ from ‘AA-/A-1+’ on Friday, as it believes budgetary consolidation over its forecast horizon will be slower than expected in the absence of significant additional budget deficit-reducing measures.
“We expect policy uncertainty will affect the French economy by dragging on investment activity and private consumption, and therefore on economic growth,” the credit ratings agency said in a statement.
Newly appointed French Prime Minister Sebastien Lecornu survived two no-confidence votes in parliament on Thursday, winning a temporary reprieve for his days-old government and the chance to deliver a budget for 2026.
According to S&P, the passage of a budget by year-end would help give greater clarity on how France will manage its rising debt burden, projected to end 2028 at 121% of GDP versus 112% of GDP at end-2024.
“Nevertheless, in our view, uncertainty on public finances remains elevated ahead of the 2027 presidential elections,” S&P said.
The agency revised the country’s outlook from ‘negative’, saying the ‘stable’ outlook balances rising government debt and weak political consensus on the pace of budgetary consolidation against France’s credit strengths.