S&P Downgrades France's Credit Rating Amid Political Turmoil and Fiscal Uncertainty
S&P downgrades France's credit rating to A+, citing political instability and fiscal uncertainty threatening the country’s financial outlook.
- • S&P downgraded France's credit rating from AA− to A+ due to political instability and high fiscal uncertainty.
- • Political turmoil includes parliamentary motions of censure and no majority governments since 2022.
- • S&P forecasts deficits above government targets and public debt rising to 121% of GDP by 2028.
- • French government commits to deficit reduction targets despite the downgrade.
- • 2026 budget includes measures impacting chronic illness reimbursements and high-income households.
Key details
On October 17, 2025, the credit rating agency S&P downgraded France's sovereign credit rating from AA− to A+, citing heightened political instability and significant uncertainty surrounding the country's public finances. This downgrade, moved forward from a planned date of November 28, reflects concerns over France's ability to achieve fiscal consolidation amid ongoing political challenges.
S&P highlighted recent political chaos, including multiple motions of censure in Parliament and two successive parliaments without a majority since May 2022, which collectively hamper efforts to stabilize public finances. The agency noted France has experienced six prime ministers in three years, underscoring the fragility of political leadership. Due to these conditions, S&P expressed skepticism about the government's capacity to meet deficit reduction targets and forecasted high uncertainty in public finances until at least 2027.
Specifically, S&P expects France’s budget deficit to be 5.4% of GDP in 2025 and 5.3% in 2026, exceeding the government's targeted 4.7%. The agency also projects the public debt ratio to climb from 112% of GDP at the end of 2024 to 121% by 2028. These forecasts reflected concerns that the French government has suspended key pension reforms, which have hindered efforts to reduce deficits.
In response, French Economy Minister Roland Lescure acknowledged the downgrade but reaffirmed the government’s commitment to achieving a 5.4% deficit target in 2025 and to accelerating deficit reduction to 4.7% by 2026, aiming to bring it below 3% by 2029. The government recently submitted a budget proposal aligned with these objectives, emphasizing shared responsibility between the government and Parliament to pass a credible budget.
Additionally, the 2026 budget includes measures such as restricting reimbursements for certain chronic illnesses and reinstating a differential contribution on high incomes, targeting approximately 24,300 wealthy families. Prime Minister Sébastien Lecornu described the budget drafts as "serious and reliable" in facing France’s fiscal challenges.
Overall, the S&P downgrade underscores the significant impact of France's political fragmentation on its financial stability and casts uncertainty on the timeline for fiscal consolidation, marking a critical moment for policymakers and markets alike.