Fitch Ratings changed its outlook on France’s credit rating to negative. The unscheduled decision highlights how quickly the country’s public finances are deteriorating, Bloomberg reports.

Details

Late on October 30, Fitch changed its outlook on France’s long-term ratings from stable to negative, citing weakening economic growth, rising borrowing costs and a growing budget deficit. The rating itself was affirmed at A+ — on par with Portugal and Belgium and six notches above junk status.

The change in the outlook reflects «a deterioration in the situation since August 2026, including slowing growth, higher borrowing costs and a widening budget deficit», Fitch said in a statement. According to the agency, the total fiscal adjustment needed to stabilize debt has increased to around 3.5% of GDP, from 3.0% in August. At the same time, persistent political fragmentation and a difficult social climate make long-term fiscal consolidation more challenging, Fitch noted.

The agency also noted that large-scale protests against public services policy and the rising cost of living are creating further challenges for fiscal consolidation. Fitch’s decision was published ahead of further protests scheduled for the weekend in French cities, including Paris.

Background

The French economy unexpectedly contracted in the third quarter under pressure from a continued decline in investment, according to data from statistics agency Insee. The budget deficit is expected to reach 5.4% of GDP this year.

Prime Minister Sébastien Lecornu proposed a budget plan that sharply limits spending and increases tax revenue, aiming to reduce the deficit to 5% next year. However, the document’s future remains uncertain, as the government lacks a majority in parliament, Bloomberg noted. Opposition forces are unwilling to compromise, focusing instead on the presidential election, which will take place in six months. Leading candidates from the far left to the far right are proposing radical policy changes, including lowering the retirement age and significantly raising taxes on businesses.

The spread between the yields on 10-year French and German bonds reached 178 basis points this month, compared with 85 basis points in early September, before the sell-off began. On Friday, it stood at around 165 basis points.

Fitch has taken an assertive stance on France and its public finances, moving ahead of other major competitors in downgrading the country, Bloomberg noted. Moody’s Ratings, whose rating for France is one notch higher, decided last week not to downgrade it, maintaining a negative outlook. At the time, French Finance Minister Roland Lescure called the decision a recognition of «the resilience of the economy and the credibility of the budget presented by the government». On Friday, the minister struck a more restrained tone: he said Fitch’s assessment «underscores the urgent need to adopt a responsible budget by the end of the year».

Fitch and S&P Global Ratings had already downgraded France in autumn 2025 amid deteriorating public finances and political uncertainty surrounding the budget. Fitch said that developments in the country warranted «a departure from the schedule» and explained its unscheduled decision. The next scheduled review of France’s rating is due to be completed by the end of February.

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