France: Rating agency Fitch downgrades credit rating

Paris. The rating agency Fitch has downgraded France's credit rating, making it more difficult for the struggling government in Paris to finance its national debt. The credit rating of the Eurozone's second-largest economy was lowered from AA- to A+, Fitch announced overnight into Saturday. This is likely to make it somewhat more expensive for France to raise money on the capital market through government bonds.

Fitch cited the high and likely rising national debt, as well as the limited prospects for economic reforms due to domestic polarization and a lack of political stability in France, as reasons for the decision. This is symbolized by the fact that there have been three different governments since mid-2024. Most recently, on Monday evening, Prime Minister François Bayrou lost a vote of confidence in parliament after less than nine months in office, resulting in his loss of his position as head of the minority government.

At 114 percent of economic output, France has the third-highest debt ratio in the EU after Greece and Italy. In absolute terms, the country is burdened with the highest debt mountain in the Eurozone, at around €3,300 billion. Government spending is also among the highest in Europe. The budget deficit was recently at 5.8 percent. The EU has already initiated excessive deficit procedures against France in July 2024.

RND/dpa