A surprise move that shakes confidence in Europe’s second-largest economy
S&P Global has downgraded France’s sovereign credit rating from “AA-/A-1+” to “A+/A-1,” in a rare unscheduled update. The agency cited political instability as a key risk undermining the government’s fiscal repair efforts, Agerpres reports.
S&P Global stated: “We expect political uncertainties to weigh on France’s economy, reducing investment and private consumption, and therefore economic growth.”
The downgrade follows a week of political turmoil in Paris, during which Prime Minister Sebastien Lecornu pledged to suspend the pension reform while facing two no-confidence votes in parliament.
Government vows to bring deficit under control
Finance Minister Roland Lescure responded that “it is now the collective responsibility of the government and parliament” to pass the national budget by year-end, aiming to reduce the fiscal deficit toward the EU’s 3% of GDP threshold by 2029.
S&P Global noted that passing the budget would provide greater clarity on how France plans to manage its rising public debt, projected to climb to 121% of GDP by 2028, up from 112% in 2024.
Photo: Bloomberg
