Public debt: The Fitch agency maintains France's A+ rating but lowers its outlook

The deterioration of French public finances and the rise in borrowing rates worry Fitch Ratings. On Friday, the rating agency maintained France's sovereign rating at A+, while lowering its outlook from stable to negative. A decision which reflects the country's growing difficulties in controlling its debt.

“Weaker growth, further fiscal deterioration and higher yields have increased the difficulty of carrying out the sustained fiscal consolidation needed to halt France's debt deterioration trajectory,” Fitch explains in its press release. The agency also highlights obstacles linked to “persistent political fragmentation and a difficult social context”. Lescure calls for the adoption of “a responsible budget” This decision comes as French borrowing rates have increased sharply.

On Friday, the yield on ten-year government bonds reached 4.97%, compared to 4.91% on Thursday, after crossing the 5% threshold the previous week. Fitch notes a more marked increase than in most comparable countries, indicating increased sensitivity to market confidence. The Minister of the Economy, Roland Lescure, reacted by calling for “a responsible budget” to be adopted before the end of the year, intended to reduce the public deficit to 5%.

On Thursday, he recognized that “the French economy (was) at a standstill”, after the publication of a decline in GDP of 0.1% in the third quarter, following stagnation in the second quarter and a contraction in the first. An A+ rating which remains justified During its previous assessment, at the end of August, Fitch maintained the rating and outlook for France, highlighting the resilience of its economy. Since then, the agency has observed a “deterioration in debt dynamics”, which complicates the efforts necessary to restore public accounts.

Despite these risks, Fitch considers that the A+ rating remains justified by “the size, wealth and diversification” of the French economy, as well as by the solidity of institutions, membership in the euro zone and the resilience of the banking sector.

Machine-translated from French