Fitch Affirms France at ‘A+’ with Stable Outlook
Fitch Ratings has affirmed France’s Long-Term Issuer Default Rating (IDR) at ‘A+’ with a stable outlook. France’s ratings are supported by its large, diversified high-income economy, a sound banking sector, and a diverse investor base.
Its ratings are weighed down by high and rising debt, a political and social backdrop that makes fiscal consolidation difficult, and low potential growth. In the rating note, Fitch stated that France’s high fiscal deficits and debt remain the principal rating constraint.
France’s deficit declined from 5.8% of GDP in 2024 to a lower-than-expected 5.1% in 2025, but analysts expect no further improvements, with deficits of 5.2% of GDP in 2026, 5.5% in 2027 and 5.2% in 2028.
These deficit projections are higher than at the last review, reflecting weaker growth, higher interest expenditure and additional defense commitments, Fitch added.
“We expect no improvement in the primary deficit in 2027 given the upcoming election, and only modest reductions in subsequent years with effects on overall balances mostly offset by a projected rise in interest expenditure by about 0.2pp to 0.3pp of GDP per year”.
Debt will keep rising, Fitch maintains, with rating analysts projecting that the general government debt would rise to 122.7% of GDP by 2028 from 115.7% in 2025, 1.7pp above the previous forecast at the last review.
The revision reflects weaker real GDP growth, slightly wider fiscal deficits, lower GDP deflator support and higher interest expenditure. At 122.7% of GDP, France’s debt would be more than double the projected ‘A’ peer median in 2028.
“We estimate the debt-stabilizing deficit at about 3% of GDP at present, rising to around 4% by 2030. Under a no-policy-change scenario, the deficit would rise to about 7% of GDP by 2030, implying a much larger eventual adjustment to stabilise debt”.
Fitch noted that France’s political fragmentation constrains policy. Persistent political fragmentation is a key rating weakness, as it reduces the authorities’ capacity to deliver durable fiscal adjustment and limits policy predictability.
“We view the 2027 presidential election, and the legislative elections that may be called after that, as an important driver of France’s policy and fiscal outlook. Our baseline is that fragmentation persists beyond the election and will continue constraining progress on deficit reduction.”
France’s large, diversified and wealthy economy supports the rating, but near-term growth will remain modest. Fitch expects real GDP growth of 0.8% in 2026 and 1.1% in both 2027 and 2028, but recent revisions to quarterly GDP data for 1Q and 2Q26 indicate downside risks to its forecasts. Domestic demand remains weak, reflecting cautious household behavior, subdued investment and a gradually softening labour market, although exports have been more resilient.
Beyond the weak near-term outlook, modest potential growth of around 1.1% over 2025-2029 limits France’s capacity for fiscal adjustment.
The euro’s role as a global reserve currency supports France’s financing flexibility and mitigates external vulnerability. France’s net external debt of 40% of GDP is the highest in this rating category, while a strongly positive net FDI position highlights the global reach and earnings capacity of French corporates.
Rating analysts expect the current account to remain slightly positive, supporting external resilience, despite weaker European demand and higher energy prices.
“We view France’s banking sector as resilient, benefiting from diversified business models, sound earnings, and solid capital and liquidity buffers”.
Together with sound French and European regulation, this limits risks of material contingent liabilities for the sovereign. Weaker growth, tighter financing conditions, and higher SME failures are increasing asset-quality pressures, but these risks remain manageable.
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