Fitch Downgrades France’s Outlook to Negative Amid Rising Debt Concerns

Fitch Ratings has revised France’s economic outlook from stable to negative, citing worsening public finances, weaker economic growth, rising borrowing costs and growing political instability. However, the agency maintained France’s Long-Term Issuer Default Rating at ‘A+’, warning that the country faces increasing challenges in stabilising its national debt.

France’s economy unexpectedly contracted in the third quarter of 2026, while inflation climbed to its highest level since late 2023. Government efforts to reduce spending and control the budget deficit are also facing resistance amid political divisions and planned public protests. French 10-year government bond yields recently climbed above 5.14%, reaching their highest level since 2002 and reflecting growing investor concerns.

Fitch forecasts that France’s debt-to-GDP ratio could rise to around 124% by 2028, compared with 115.7% in 2025. The agency warned that political fragmentation could make long-term deficit reduction difficult, increasing the risk of a future credit rating downgrade. The decision follows Moody’s recent move to maintain France’s ‘Aa3’ rating while also assigning it a negative outlook, highlighting mounting pressure on the euro zone’s second-largest economy.

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