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France's Credit Rating at Risk

Fitch Ratings has set negative outlook on France's credit rating. The newly appointed Prime Minister Michel Barnier's budget austerity measures for 2025 do not impress the credit rating agencies much.

» Published: 12 October 2024

France's Credit Rating at Risk
Photo: Francois Mori AP/TT

Fitch downgraded France's credit rating to AA-minus from AA as recently as April last year.

The state financial risks have increased since we downgraded the rating, Fitch notes when motivating the negative outlook for the rating, which means that they may soon lower the rating again.

A lower credit rating implies that Fitch sees greater risks with French government bonds and typically leads to higher interest rates for the affected state.

According to Fitch, France is facing a period of increased budget deficits and growing debts, which are expected to push up the national debt to 118.5 percent of GDP by 2028.

Barnier's minority government presented a budget with cuts and tax increases equivalent to 60 billion euros on Thursday. The goal is to reduce the deficit to 5 percent of GDP by 2025, from this year's estimated 6.1 percent.

The previous government, which was forced out after the French election last summer, had aimed for a deficit of 4.4 percent this year.

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By TTThis article has been altered and translated by Sweden Herald

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