France has suffered its worst-ever credit rating cut, with Fitch lowering the country’s sovereign score to A+ on Friday. The move strips the euro zone’s second-largest economy of its AA- status, piling pressure on a government already mired in political crisis and rising debt.
The downgrade comes just days after Prime Minister Sebastien Lecornu took office, tasked with forming a cabinet and drafting a 2026 budget that can survive a fractured parliament. Fitch said the cut reflects the absence of “a clear horizon for debt stabilisation,” though the rating carries a stable outlook.
Markets had largely anticipated the downgrade, analysts noted. But the timing is painful for France, highlighting concerns about its ability to control the budget deficit, now the highest in the euro zone.
President Emmanuel Macron appointed Lecornu this week after lawmakers ousted centrist veteran François Bayrou in a confidence vote over his proposed 44 billion euro ($52 billion) budget squeeze. Lecornu, Macron’s fifth prime minister in less than two years, now faces the same uphill battle that toppled his predecessors: pushing a slimmed-down budget through parliament.
“This instability weakens the political system’s capacity to deliver substantial fiscal consolidation,” Fitch said.
Finance Minister Eric Lombard acknowledged the downgrade but stressed that Lecornu is moving ahead with talks to secure support for the budget and repair public finances.
Fitch’s cut to A+ could trigger further trouble, as other agencies may follow suit, forcing some investors to dump French bonds. Borrowing costs for France have already climbed close to Italy’s, which holds the euro zone’s second-highest debt load and a lower rating.
Lecornu must now try to bring next year’s budget deficit down from an estimated 5.4% of GDP. That target is less ambitious than Bayrou’s 4.6%, but still difficult in the current political climate. The government’s draft budget is due by October 7, though Lecornu could delay until October 13 if needed.
To win over parliament, he may have to offer concessions to the Socialists, such as higher taxes on the wealthy and softening Macron’s 2023 pension reform. But those moves risk angering Macron’s allies and conservative Republicans.
Despite the downgrade, France’s major banks are not expected to face immediate pressure. BNP Paribas and Credit Agricole remain rated A+, while Societe Generale sits one notch lower at A.
($1 = 0.8532 euros)
