S&P downgrades France's credit rating amid political instability

S&P's statement emphasized that uncertainty regarding France's public finances remains high despite the 2026 budget draft being presented to parliament this week.

The statement noted that the general public budget deficit target for this year is expected to be 5.4 percent of France's Gross Domestic Product (GDP), but that unless significant additional deficit-reducing measures are taken, budget consolidation is expected to be slower than previously expected.

In the statement, it was stated that the general public gross debt is expected to reach 121 percent of GDP in 2028, and it was reminded that this rate was 112 percent of GDP at the end of last year.

As a result, France's long-term and short-term credit ratings were downgraded from "AA-/A-1+" to "A+/A-1", and the outlook for the rating was declared "stable".

It was pointed out that the rating would be downgraded further if France's budget situation worsens beyond expectations or if economic growth prospects deteriorate significantly.

The statement emphasized that a faster-than-expected reduction in France's budget deficit and an acceleration of economic growth in the country would reduce the debt-to-GDP ratio, and that in this case, the country's credit rating could be upgraded.

Last month, international credit rating agency Fitch Ratings downgraded France's credit rating from "AA-" to "A+" and set the outlook as "stable."