Fitch Ratings on September 12, 2025 lowered France’s long-term foreign-currency issuer rating from AA- to A+ and affirmed a stable outlook, citing political instability and concerns about the ability to reduce the budget deficit.

The downgrade comes in the wake of the collapse of Prime Minister François Bayrou’s minority government, which lost a confidence vote over its ambitious €44 billion fiscal package intended to reduce the deficit.

President Emmanuel Macron has since appointed Sébastien Lecornu as the new Prime Minister, who now faces the task of steering a less ambitious budget through a deeply divided parliament.

Fitch pointed to France’s deficit, which stood at around 5.8% of gross domestic product in 2024, well above the European Union ceiling of 3%.

The agency noted that social spending, underperforming tax reforms, and recent increases in defense outlays add further strain to public finances.

French public debt, exceeding 113% of GDP, also amplifies the risk.

Lecornu has begun consultations with lawmakers to build parliamentary support for the 2026 budget.

Finding compromise will require balancing pressure from left-wing parties for higher taxes and increased social protections against resistance from centrist and right factions.

Although the downgrade intensifies pressure, Fitch acknowledged strengths in the French economy, including its size, diversity, and a robust banking sector.

The agency views these as sources of resilience amid the challenge of restoring fiscal discipline under precarious political conditions.