Credit rating agency Fitch has revised France’s sovereign debt outlook from stable to negative while maintaining its rating at A+, citing weaker economic growth, rising borrowing costs and concerns over the country’s ability to reduce its public deficit.
The decision increases pressure on the French government to secure approval for its 2027 budget by the end of the year, as political divisions and an approaching presidential election complicate efforts to restore public finances.
Fitch’s announcement on Friday followed figures from the national statistics institute Insee showing that France’s gross domestic product contracted by 0.1% in the third quarter of 2026. The economy had stagnated in the second quarter after shrinking by 0.2% in the first three months of the year.
The agency pointed to persistent political fragmentation and a difficult social climate, including mass protests, as factors weakening confidence in the government’s ability to deliver lasting fiscal improvements.
Economy and Finance Minister Roland Lescure said he took note of Fitch’s decision, describing the adoption of a responsible budget before the end of the year as an absolute necessity.
The government aims to reduce the budget deficit to 5% of gross domestic product, while maintaining a path towards fiscal consolidation. Lescure said a clear budget was needed to give businesses and investors greater certainty in an uncertain international environment.
Earlier on Friday, he described the French economy as being at a standstill and warned that the country could face serious difficulties if the proposed recovery budget was not adopted. He repeated that the deficit needed to be brought down to 5% or less.
However, securing parliamentary approval remains uncertain because President Emmanuel Macron’s government lacks a majority in the National Assembly. The approaching 2027 presidential election is also adding to political tensions.
Fitch expects the budget to be adopted despite the parliamentary deadlock, pointing to constitutional procedures available to the government. The agency said political debates ahead of the election had done little to strengthen its confidence in France’s ability to achieve a lasting reduction in the deficit and stabilise public debt.
One option available to the government is Article 49.3 of the French Constitution, which allows legislation to pass without a parliamentary vote unless lawmakers approve a motion of no confidence.
The government could also consider adopting the budget through ordinances, although this procedure has never been used to pass a national budget since the Fifth Republic was established in 1958.
Jérôme Mathis, an economics professor at Paris-Dauphine University, told Euronews that using ordinances could reduce uncertainty in the short term. However, he warned that such a move would not necessarily restore France’s long-term fiscal credibility.
The negative outlook signals increased concern over France’s financial position, although its A+ rating remains unchanged. The government’s ability to pass the 2027 budget and demonstrate credible deficit-reduction measures will be central to restoring confidence.
