Moody's Affirms France's Aa3 Credit Rating with Negative Outlook Amid Political Fragmentation

On April 10, 2026, Moody's Investors Service confirmed France's sovereign credit rating at Aa3, signaling the country's debt remains of good quality. This rating stands one notch above those assigned by Standard & Poor's and Fitch, which rate France at A+. Moody's highlighted the 2026 budget deficit projection of 5%, a slight improvement from the earlier forecast of 5.2%, and noted the public deficit for 2025 was 5.1% of GDP, down significantly from 5.8% in 2024.

The rating affirmation reflects Moody's confidence in the strength of French institutions and governance, citing a recent budget agreement reached between moderate left and center-right factions within a politically fragmented Parliament. However, the agency maintains a negative outlook due to persistent risks linked to political fragmentation, which could undermine the legislative process and impede agreement on future deficit reduction measures beyond 2026. Concerns were raised over the 2026 budget’s lack of clear plans to sustainably reduce the deficit after this year.

Moody's forecasts that France's economy will grow by 1% in 2026 with an inflation rate of 1.4%. Despite this modest growth and some deficit improvement, the agency points to the significant challenge posed by political divisions, which increase uncertainty around France's fiscal consolidation efforts. This comes as the French government targets reducing the deficit below 3% of GDP by 2029, a goal seen as ambitious given the current political landscape.

French Economy Minister Roland Lescure acknowledged Moody's decision. Moody's had downgraded its outlook to negative last October, emphasizing that France's large debt— the largest in the Eurozone by volume and third highest relative to GDP in Europe after Greece and Italy—requires decisive political action that remains uncertain. The recent affirmation reinforces the view of France's creditworthiness but underlines risks linked to political instability that could disrupt future fiscal progress.