Fitch Revises France’s Outlook to “Negative”, Affirms at 'AA-'

Fitch Ratings revised France’s outlook to “negative” on Friday while maintaining its AA- rating, citing increased fiscal policy risks, with government debt set to move toward 118.5% of gross domestic product (GDP) by 2028.

Fitch Ratings revised France’s outlook to “negative” from “stable” on Friday, citing increased fiscal policy and political risks.

“The fiscal slippage expected this year puts France in a worse fiscal position, and we now expect a wider fiscal deficit, leading to a sharp rise in government debt to 118.5 percent of GDP by 2028,” Fitch said in a statement, keeping France’s rating at AA-.

French public finances have deteriorated sharply this year as tax revenues fell short of expectations and spending exceeded expectations, leaving French debt at risk of a downgrade.

The government presented its 2025 budget on Thursday, which aims to narrow the gap in public finances by 60 billion euros ($65.5 billion) through spending cuts and tax increases that target the wealthy and big companies.

“The 2025 budget we have just presented reflects the government’s determination to put public finances on a better path and get the debt under control,” Finance Minister Antoine Armand said in a statement.

Fitch said extreme political fragmentation and a minority government were complicating France’s ability to achieve its goal of putting its public finances on a more solid footing.